ING investors looking to exit as part of sectoral rotation
14 Dec, 201813 min read
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ING GROEP NV (Foreign) has destroyed investor wealth on Friday. It delivered -1.12% to close at 11.43. On a day when the overall market breadth was 35%, it closed higher than 71% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.
ING is currently in a bearish trend. The current bearish signal has generated a profit of +11.74% for investors in the last three months.
ING has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 1 Aug, 2017 to 9 Oct, 2018. Over the last 2 years 11 months and 10 days, ING underperformed the SP500 index on 51% days.
ING returned losses on 59% days in the last three months. During this time, it delivered on average -0.18% per day. It delivered it's best daily return of +7.96%, during this period, on Thursday, 1 Nov, 2018. The longest stort-term trends during this period were 5 profitable and losing days. The bullish trend (which returned +5.49%) started on 17 Sep, 2018 and went on till 21 Sep, 2018 while the bearish trend (which returned -5.57%) started on 26 Sep, 2018 and went on till 2 Oct, 2018.
The last 12 months saw ING's investors making profits in 4 months and incurring losses in 8 months. ING was less consistent in delivering monthly returs than SP500 index. ING was also a more risky investment than SP500 index as it's worst month in the last year, May 2018, returned -12.86% compared to -7.28% returned by SP500 index in Oct 2018. ING had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Aug 2018 to Oct 2018) during which period it delivered -24.01%. It is interesting to note that both ING and SP500 index significantly outperform during months when quarterly/annual results are announced.
Be quick in cutting your loses but not profits
-- Abhishek Shukla
ING is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in ING's volatility from 17 Sep, 2018 to 11 Dec, 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 ING has significant positive skewness in it's return distribution. This indicates that investors can expect ING to recover from drawdowns quickly. Which makes ING a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
SP500 index has more chance of extreme outcomes than ING. Therefore, SP500 must receive a lower allocation than ING in your portfolio. SP500 index usually has shorter drawdown period than ING.
Based on your interest in ING you may find it interesting to know that GNK is highly volatile and investors investing in it must take extreme caution. Consider either reducing your exposure to GNK or sufficiently diversifying your portfolio.
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