Are you evaluating investing in NPK? Avoid as it delivered massive losses
14 Dec, 201813 min read
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NATIONAL PRESTO INDUSTRIES INC delivered massive losses today. It lost -1.49% to close at 121.48. It's recent 5 day performance has been -3.44%, +3.26%, +1.97%, +0.1% and -0.21%.
NPK showed a down trend over the last 3 months. During this period NPK lost -3.97% and saw a maximum drawdown of -9.17%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in NPK till volatility reduces and a clear trend emerges.
NPK has been underperforming the SP500 index in recent time, after having outperformed till 21 Aug, 2018. Over the last 2 years 11 months and 10 days, NPK outperformed the SP500 index on 53% days.
During the last three months NPK was mostly loss making and delivered on average -0.05% per day. It's best return during this period (of +3.83%) was on Monday, 22 Oct, 2018. While it's worst loss in the same period (of -3.44%) was on Thursday, 13 Dec, 2018. There was initially a bullish trend during this period which started on 24 Sep, 2018 and went on till 28 Sep, 2018. The bullish trend returned +4.04% to investors. This was followed by a bearish trend that started on 20 Nov, 2018 and ended on 27 Nov, 2018. This bearish trend lost -5.87% of investor capital.
NPK had 7 profitable and 5 loss making months over the last year. During the last year, NPK underperformed SP500 index on monthly return basis. NPK significantly outperformed SP500 index in May 2018, when it returned +17.91% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. NPK had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.
I'm only rich because I know when I'm wrong..I basically have survived by recognizing my mistakes.
-- George Soros
NPK 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 NPK's volatility from 17 Sep, 2018 to 29 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 NPK has significant positive skewness in it's return distribution. This indicates that investors can expect NPK to recover from drawdowns quickly. Which makes NPK 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 NPK. Therefore, SP500 must receive a lower allocation than NPK in your portfolio. SP500 index usually has shorter drawdown period than NPK.
On a general note (since you are interested in NPK), two instruments that have delivered similar performance as NPK are DOC and UHN. They are suitable as good alternative investment candidates that can diversify your portfolio.
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