146.45 -2.4 (-1.64%) Sell

Doubt in the minds of NVDA investors as it significantly underperforms

13 min read

NVIDIA CORP significantly underperformed today. It fell by -1.64% to close at 146.45. During the last week it fell by -3.56% and saw a maximum drawdown of -3.56%.

[Themes containing NVDA]

Buy-and-Hold investors in NVDA experienced a maximum drawdown of -49.99% over the last three months. It fell by -46.54% during this strong bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +40.39%.


NVDA has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 8 Feb, 2016 to 1 Oct, 2018. Over the last 2 years 11 months and 10 days, NVDA outperformed the SP500 index on 56% days.

During the last three months NVDA was mostly loss making and delivered on average -0.88% per day. It's best return during this period (of +9.36%) was on Tuesday, 30 Oct, 2018. While it's worst loss in the same period (of -18.76%) was on Friday, 16 Nov, 2018. The longest stort-term trend during this period was 6 losing days, which started on 4 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -19.36% of investor capital.

During the last year NVDA had 6 profitable months and 6 loss making months. NVDA returned profits in fewer months than SP500 index. NVDA was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -27.14% compared to -7.28% returned by SP500 index in Oct 2018. NVDA had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both NVDA and SP500 index significantly outperform during months when quarterly/annual results are announced.

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NVDA is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in NVDA'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 NVDA 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 NVDA 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 NVDA. Therefore, SP500 must receive a lower allocation than NVDA in your portfolio. SP500 index usually has shorter drawdown period than NVDA.

Based on your interest in NVDA you may find it interesting to know that SBOT, AMRH and APRN have all shown remarkable performance and qualify to be on every investor's watchlist.

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