Profit booking on the minds of NOW investors as it performed better than the broader market
13 Dec, 201813 min read
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NOW delivered stellar performance today. On a longer term basis, investors in SERVICENOW, INC. made -0.09% per day. Thursday's performance of +0.27% was a significant outperformance compared to it's daily average.
Buy-and-Hold investors in NOW experienced a maximum drawdown of -22.75% over the last three months. It returned -7.3% during this down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.
NOW has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 9 days, NOW outperformed the SP500 index on 56% days.
NOW returned losses on 51% days in the last three months. During this time, it delivered on average -0.07% per day. It delivered it's worst daily return of -8.35%, during this period, on Monday, 19 Nov, 2018. There was initially a bullish trend during this period which started on 20 Sep, 2018 and went on till 25 Sep, 2018. The bullish trend returned +6.11% to investors. This was followed by a bearish trend that started on 8 Nov, 2018 and ended on 14 Nov, 2018. This bearish trend lost -12.9% of investor capital.
On monthly basis, NOW delivered profits in more months over the last year, than losses. NOW delivered profits less regularly than SP500 index. NOW significantly outperformed SP500 index in Jan 2018, when it returned +13.01% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. NOW had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year.
"Being in control of your finances is a great stress reliever.
NOW is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in NOW's volatility from 14 Sep, 2018 to 31 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that NOW 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.
Investors trading in NOW derivatives at this moment can consider 'Long Straddle' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than NOW. Therefore, SP500 must receive a lower allocation than NOW in your portfolio. SP500 index usually has shorter drawdown period than NOW.
Based on your interest in NOW you may find it interesting to know that NFEC has shown remarkable performance this year and deserves to be on every investors' watchlist.
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