26.64 -0.82 (-3.09%) Buy

NI investors herd to book profits while the going is good

13 min read

NISOURCE INC significantly underperformed today. It returned -3.09% to close at 26.64. During the last week it returned -3.13% and saw a maximum drawdown of -3.55% before bouncing back.

[Themes containing NI]

Buy-and-Hold investors in NI experienced a maximum drawdown of -6.21% over the last three months. It gained +2.78% during this up trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals. The net profit from Long signals was +4.88%.


NI has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, NI outperformed the SP500 index on 53% days.

NI was profitable on 53% days in the last three months. During this time, it delivered on average +0.05% per day. It delivered it's best daily return of +3.52%, during this period, on Wednesday, 24 Oct, 2018. There was initially a bullish trend during this period which started on 1 Nov, 2018 and went on till 7 Nov, 2018. The bullish trend returned +3.14% to investors. This was followed by a bearish trend that started on 12 Nov, 2018 and ended on 15 Nov, 2018. This bearish trend lost -3.29% of investor capital.

On monthly basis, NI delivered profits in more months over the last year, than losses. NI delivered profits less regularly than SP500 index. NI was also a more risky investment than SP500 index as it's worst month in the last year, Sep 2018, returned -7.94% compared to -7.28% returned by SP500 index in Oct 2018. NI had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.

Be quick in cutting your loses but not profits
-- Abhishek Shukla

NI 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 fall in NI's volatility from 21 Sep, 2018 to 2 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 NI has significant positive skewness in it's return distribution. This indicates that investors can expect NI to recover from drawdowns quickly. Which makes NI 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 NI. Therefore, SP500 must receive a lower allocation than NI in your portfolio. NI usually has shorter drawdown period than the SP500 index.

Based on your interest in NI you may find it interesting to know that BURL is a small cap that has shown remarkable performance and deserves to be on every investors' watchlist.

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