31.49 -1.09 (-3.46%) Sell

SIG investors incur serious losses

13 min read

SIGNET JEWELERS LTD delivered massive losses on Monday. It delivered -3.46% to close at 31.49. On a day when the overall market breadth was 34%, it closed higher than 73% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing SIG]

Buy-and-Hold investors in SIG experienced a maximum drawdown of -53.36% over the last three months. It delivered -53.36% 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 +49.51%.


SIG has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 7 Jan, 2016 to 15 Mar, 2018. Over the last 2 years 11 months and 10 days, SIG underperformed the SP500 index on 52% days.

SIG returned losses on 69% days in the last three months. During this time, it delivered on average -1.14% per day. It delivered it's worst daily return of -18.05%, during this period, on Thursday, 6 Dec, 2018. The longest stort-term trend during this period was 9 losing days, which started on 4 Dec, 2018 and ended on 17 Dec, 2018. This bearish trend lost -49.48% of investor capital.

The last 12 months saw SIG's investors making profits in 6 months and incurring losses in 6 months. SIG was less consistent in delivering monthly returs than SP500 index. SIG was also a more risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -38.1% compared to -7.28% returned by SP500 index in Oct 2018. SIG and SP500 index, both had periods of 6 consecutive profitable months. It is interesting to note that both SIG and SP500 index significantly outperform during months when quarterly/annual results are announced.

The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.
-- T.T. Munger

SIG 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 SIG's volatility from 18 Sep, 2018 to 6 Dec, 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 SIG has significant positive skewness in it's return distribution. This indicates that investors can expect SIG to recover from drawdowns quickly. Which makes SIG a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in SIG 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 SIG. Therefore, SP500 must receive a lower allocation than SIG in your portfolio. SIG usually has shorter drawdown period than the SP500 index.

On a general note (since you are interested in SIG), two large cap instruments that deserve special mention are AMZN and UNH. They have significantly outperformed the overall market.

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