8.19 -0.14 (-1.68%) Sell

RMBS investors disappointed by market underperformance

13 min read

RAMBUS INC ranked among the worst performers on Friday. It returned -1.68% to close at 8.19. It is currently trading -44% below it's 52 week high of 14.75.

[Themes containing RMBS]

Buy-and-Hold investors in RMBS experienced a maximum drawdown of -29.21% over the last three months. It returned -28.6% during this strong 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. The net profit from Short signals was +17.18%.


RMBS has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 3 days, RMBS underperformed the SP500 index on 51% days.

During the last three months RMBS was mostly loss making and delivered on average -0.5% per day. It's best return during this period (of +7.35%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -6.73%) was on Wednesday, 24 Oct, 2018. There was initially a bearish trend during this period which started on 1 Oct, 2018 and went on till 12 Oct, 2018. The trend delivered -17.06% losses to investors. This was followed by a bullish trend that started on 6 Nov, 2018 and ended on 8 Nov, 2018. This bullish trend delivered +0.11% to investors.

On monthly basis, RMBS delivered losses in more months over the last year, than profits. RMBS delivered profits less regularly than SP500 index. RMBS was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -18.67% compared to -7.28% returned by SP500 index in Oct 2018. RMBS had a longer winning streak of losing months than SP500 index. It went down in 6 straight months (from May 2018 to Oct 2018) during which period it delivered -39.49%.

If all the economists were laid end to end, they'd never reach a conclusion.
-- George Bernard Shaw

RMBS 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 RMBS's volatility from 19 Sep, 2018 to 1 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 RMBS has significant positive skewness in it's return distribution. This indicates that investors can expect RMBS to recover from drawdowns quickly. Which makes RMBS 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 RMBS. Therefore, SP500 must receive a lower allocation than RMBS in your portfolio. RMBS usually has shorter drawdown period than the SP500 index.

On a general note (since you are interested in RMBS), three instruments that deserve special mention are TNDM, TPNL and HEAR. They have all outperformed the market and must be closely watched for investment opportunities.

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