65.14 -0.95 (-1.45%) Sell

Stop-loss on the minds of GRMN investors as it delivered massive losses

13 min read

GARMIN LTD delivered massive losses today. It lost -1.45% to close at 65.14. During the last week it grew by +0.32% and saw a maximum drawdown of -1.71% before bouncing back.

[Themes containing GRMN]

GRMN is currently in a down trend. Over the last three months trading short signals has not been a profitable strategy for GRMN's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -4.68%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to GRMN.


GRMN has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, GRMN outperformed the SP500 index on 54% days.

During the last three months GRMN was mostly loss making and delivered on average -0.07% per day. It's best return during this period (of +4.93%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -3.91%) was on Wednesday, 10 Oct, 2018. There was initially a bullish trend during this period which started on 17 Sep, 2018 and went on till 21 Sep, 2018. The bullish trend returned +2.46% to investors. This was followed by a bearish trend that started on 1 Oct, 2018 and ended on 15 Oct, 2018. This bearish trend lost -11.78% of investor capital.

GRMN had 8 profitable and 4 loss making months over the last year. During the last year, number of profitable months of GRMN and SP500 index were the same. GRMN significantly outperformed SP500 index in Aug 2018, when it returned +9.11% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. GRMN and SP500 index, both had periods of 6 consecutive profitable months. It is interesting to note that both GRMN and SP500 index significantly outperform during months when quarterly/annual results are announced.

The difference between succeeding and failing is consistency.
-- Don Connelly

GRMN is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in GRMN's volatility from 17 Sep, 2018 to 31 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that GRMN has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

Investors trading in GRMN derivatives at this moment can consider 'Long Straddle' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than GRMN. Therefore, SP500 must receive a lower allocation than GRMN in your portfolio. SP500 index usually has shorter drawdown period than GRMN.

On a general note (since you are interested in GRMN), two instruments that have been extremely volatile in recent times are VIPS and IX. Investors in these instruments should consider reducing their exposure (to VIPS and IX) and diversifying their portfolios.

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