SSD investors hold onto their investments as it marginally outperforms
12 Dec, 201813 min read
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SIMPSON MANUFACTURING CO INC ranked better than it's peers on Wednesday. It delivered +1.2% to close at 54.66. On a day when the overall market breadth was 35%, it closed higher than 11% of the market. In comparison, the benchmark SP500 index closed today at +0.54%.
Buy-and-Hold investors in SSD experienced a maximum drawdown of -30.54% over the last three months. It delivered -28.88% 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 +24.8%.
SSD has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 14 Jan, 2016 to 11 Sep, 2018. Over the last 2 years 11 months and 8 days, SSD outperformed the SP500 index on 51% days.
During the last three months SSD was mostly loss making and delivered on average -0.53% per day. It's best return during this period (of +2.72%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -5.36%) was on Monday, 15 Oct, 2018. The longest stort-term trend during this period was 8 losing days, which started on 4 Oct, 2018 and ended on 15 Oct, 2018. This bearish trend lost -11.89% of investor capital.
The last 12 months saw SSD's investors making profits in 6 months and incurring losses in 6 months. SSD was less consistent in delivering monthly returs than SP500 index. SSD was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -20.65% compared to -7.28% returned by SP500 index in Oct 2018. SSD had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year. It is interesting to note that both SSD and SP500 index significantly outperform during months when quarterly/annual results are announced.
It's not the situation, but whether we react (negative) or respond (positive) to the situation that's important.
-- Zig Ziglar
SSD 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 SSD's volatility from 20 Sep, 2018 to 30 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that SSD 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.
SP500 index has more chance of extreme outcomes than SSD. Therefore, SP500 must receive a lower allocation than SSD in your portfolio. SP500 index usually has shorter drawdown period than SSD.
Based on your interest in SSD you may find it interesting to know that NFEC has shown remarkable performance this year and deserves to be on every investors' watchlist.
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