SSTI is a falling knife, continues to bleed every investor trying to catch it
14 Dec, 201813 min read
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SHOTSPOTTER, INC significantly underperformed on Friday. It delivered -2.84% to close at 34.54. It is currently trading -45% below it's 52 week high of 63.12.
SSTI showed a strong bearish trend over the last 3 months. During this period SSTI delivered -42.04% and saw a maximum drawdown of -52.5%. There was a short signal during this period which returned +37.97%.
SSTI has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 2 Aug, 2017 to 27 Sep, 2018. Over the last 1 year 6 months and 7 days, SSTI outperformed the SP500 index on 49% days. Which indicates that on days SSTI outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.
SSTI returned losses on 54% days in the last three months. During this time, it delivered on average -0.74% per day. It delivered it's worst daily return of -15.36%, during this period, on Wednesday, 14 Nov, 2018. The longest stort-term trend during this period was 5 losing days, which started on 5 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -27.33% of investor capital.
The last 12 months saw SSTI's investors making profits in 8 months and incurring losses in 4 months. During the last year, SSTI and SP500 index had the same number of profitable months. SSTI significantly outperformed SP500 index in Mar 2018, when it returned +43.87% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. SSTI had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year.
There is nothing wrong with changing a plan when the situation has changed.
-- Seneca
SSTI 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 fall in SSTI's volatility from 17 Sep, 2018 to 27 Sep, 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 SSTI has significant negative skewness in it's return distribution. This indicates that SSTI is very risky for short-term investment and can significantly underperform for long durations.
SSTI has more chance of extreme outcomes than the SP500 index. Therefore, SSTI must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than SSTI.
Based on your interest in SSTI you may find it interesting to know that LEJU, SIEB and EGRX have all performed similar to SSTI and qualify as alternative investment candidates that must be evaluated for diversification.
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