NMR is a falling knife, continues to bleed every investor trying to catch it
07 Dec, 201813 min read
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NOMURA HOLDINGS INC (Foreign) was among the worst performers today. It returned -1.44% to close at 4.1. During the last week it returned -8.28% and saw a maximum drawdown of -8.48% before bouncing back.
NMR is currently in a down trend. Over the last three months 2 bearish signals have generated a profit of +6.71% for investors.
NMR has been underperforming the SP500 index in recent time, after having outperformed till 9 Dec, 2016. Over the last 2 years 11 months and 3 days, NMR underperformed the SP500 index on 49% days. Which indicates that on days NMR underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months NMR was mostly loss making and delivered on average -0.18% per day. It's best return during this period (of +2.98%) was on Thursday, 25 Oct, 2018. While it's worst loss in the same period (of -5.13%) was on Tuesday, 4 Dec, 2018. There was initially a bullish trend during this period which started on 13 Sep, 2018 and went on till 21 Sep, 2018. The bullish trend returned +7.79% to investors. This was followed by a bearish trend that started on 24 Sep, 2018 and ended on 28 Sep, 2018. This bearish trend lost -4.07% of investor capital.
On monthly basis, NMR delivered losses in more months over the last year, than profits. NMR delivered profits less regularly than SP500 index. NMR significantly outperformed SP500 index in Jan 2018, when it returned +11.19% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. NMR had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from May 2018 to Aug 2018) during which period it delivered -21.31%. It is interesting to note that both NMR and SP500 index significantly outperform during months when quarterly/annual results are announced.
Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it .
-- Peter Lynch
NMR 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 NMR's volatility from 24 Sep, 2018 to 7 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that NMR 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 NMR. Therefore, SP500 must receive a lower allocation than NMR in your portfolio. SP500 index usually has shorter drawdown period than NMR.
On a general note (since you are interested in NMR), two instruments that deserve special mention are AMRH and TYHT. They have significantly outperformed the overall market.
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