KMI is a falling knife, continues to bleed every investor trying to catch it
14 Dec, 201813 min read
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KINDER MORGAN, INC. was among the worst performers on Friday. It returned -1.46% to close at 16.17. It is currently trading -17% below it's 52 week high of 19.63.
KMI is currently in a down trend. The current bearish signal has generated a profit of +7.65% for investors in the last three months.
KMI has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, KMI underperformed the SP500 index on 53% days.
During the last three months KMI delivered profits on 55% days. However, it still managed to end this period in a loss. It's best return during this period (of +2.54%) was on Monday, 1 Oct, 2018. While it's worst loss in the same period (of -3.58%) was on Tuesday, 4 Dec, 2018. There was initially a bearish trend during this period which started on 24 Sep, 2018 and went on till 27 Sep, 2018. The trend delivered -2.79% losses to investors. This was followed by a bullish trend that started on 26 Nov, 2018 and ended on 3 Dec, 2018. This bullish trend delivered +4.1% to investors.
On monthly basis, KMI delivered profits and losses in equal number of months. KMI delivered profits less regularly than SP500 index. KMI was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -9.9% compared to -7.28% returned by SP500 index in Oct 2018. KMI had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.
-- William A. Ward
KMI is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in KMI's volatility from 17 Sep, 2018 to 30 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 KMI has significant negative skewness in it's return distribution. This indicates that KMI is very risky for short-term investment and can significantly underperform for long durations.
Investors trading in KMI derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than KMI. Therefore, SP500 must receive a lower allocation than KMI in your portfolio. SP500 index usually has shorter drawdown period than KMI.
On a general note (since you are interested in KMI), two instruments that have delivered similar performance as KMI are HDS and MGIC. They are suitable as good alternative investment candidates that can diversify your portfolio.
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