6.67 -0.05 (-0.74%) Sell

PSEC is a falling knife, continues to bleed every investor trying to catch it

13 min read

PSEC was among the worst performers today. On a longer term basis, investors in PROSPECT CAPITAL CORP made +0.04% per day. Friday's performance of -0.74% was a underperformance compared to it's daily average.

[Themes containing PSEC]

Buy-and-Hold investors in PSEC experienced a maximum drawdown of -10.74% over the last three months. It delivered -8.63% during this 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 +8.25%.


PSEC has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 23 Feb, 2017 to 2 Nov, 2017. Over the last 2 years 11 months and 3 days, PSEC underperformed the SP500 index on 48% days. Which indicates that on days PSEC underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months PSEC was mostly loss making and delivered on average -0.14% per day. It's best return during this period (of +1.91%) was on Wednesday, 7 Nov, 2018. While it's worst loss in the same period (of -2.35%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 6 losing days, which started on 17 Oct, 2018 and ended on 24 Oct, 2018. This bearish trend lost -6.48% of investor capital.

The last 12 months saw PSEC's investors making profits in 5 months and incurring losses in 7 months. PSEC was less consistent in delivering monthly returs than SP500 index. PSEC significantly outperformed SP500 index in Aug 2018, when it returned +7.14% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. PSEC had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year.

When buying shares, ask yourself, would you buy the whole company?
-- Rene Rivkin

PSEC is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in PSEC's volatility from 27 Sep, 2018 to 7 Nov, 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 PSEC has significant positive skewness in it's return distribution. This indicates that investors can expect PSEC to recover from drawdowns quickly. Which makes PSEC 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 PSEC. Therefore, SP500 must receive a lower allocation than PSEC in your portfolio. SP500 index usually has shorter drawdown period than PSEC.

Based on your interest in PSEC you may find it interesting to know that AMRH and DLPH have both shown remarkable performance and deserve to be on every investors' watchlist.

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