Doubt in the minds of HVT investors as it significantly underperforms
18 Dec, 201813 min read
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HAVERTY FURNITURE COMPANIES INC ranked among the worst performers today. It fell by -0.36% to close at 19.11. It's recent 5 day performance has been -0.31%, -0.47%, -0.87%, +1.35% and -1.64%.
HVT is currently in a bearish trend. Over the last three months trading short signals has not been a profitable strategy for HVT's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -12.14%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to HVT.
HVT has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 10 May, 2017 to 19 Apr, 2018. Over the last 2 years 11 months and 14 days, HVT underperformed the SP500 index on 50% days. Which indicates that on days HVT underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months HVT was mostly loss making and delivered on average -0.19% per day. It's best return during this period (of +3.67%) was on Friday, 2 Nov, 2018. While it's worst loss in the same period (of -5.62%) was on Friday, 30 Nov, 2018. The longest stort-term trends during this period were 5 profitable and losing days. The bullish trend (which returned +3.39%) started on 21 Nov, 2018 and went on till 28 Nov, 2018 while the bearish trend (which returned -3.19%) started on 8 Nov, 2018 and went on till 14 Nov, 2018.
During the last year HVT had 4 profitable months and 8 loss making months. HVT returned profits in fewer months than SP500 index. HVT significantly outperformed SP500 index in Aug 2018, when it returned +11.62% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. HVT had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Jan 2018 to Apr 2018) during which period it delivered -17.41%.
Never spend your money before you have earned it.
-- Thomas Jefferson
HVT is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in HVT's volatility from 4 Oct, 2018 to 31 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that HVT 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.
SP500 index has more chance of extreme outcomes than HVT. Therefore, SP500 must receive a lower allocation than HVT in your portfolio. SP500 index usually has shorter drawdown period than HVT.
Based on your interest in HVT you may find it interesting to know that IX, GNK and ICPT are all extremely risky investment candidates that must be evaluated carefully. Investors with low risk profile are better off avoiding them till their performance becomes more consistent.
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