119.97 -1.83 (-1.53%) Buy

Waiting to invest in TM? Look for alternatives because it trailed the broader market

13 min read

TOYOTA MOTOR CORP (Foreign) was among the worst performers on Friday. It delivered -1.53% to close at 119.97. It is currently trading -14% below it's 52 week high of 140.72.

[Themes containing TM]

TM showed a flat trend over the last 3 months. During this period TM delivered +0.66% and saw a maximum drawdown of -8.86%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in TM till volatility reduces and a clear trend emerges.


TM has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 2 Feb, 2016 to 10 Sep, 2018. Over the last 2 years 11 months and 3 days, TM underperformed the SP500 index on 51% days.

TM was profitable on 50% days in the last three months. During this time, it delivered on average +0.02% per day. It delivered it's worst daily return of -2.88%, during this period, on Wednesday, 24 Oct, 2018. The longest stort-term trends during this period were 5 profitable and losing days. The bullish trend (which returned +4.44%) started on 13 Sep, 2018 and went on till 19 Sep, 2018 while the bearish trend (which returned -5.1%) started on 9 Oct, 2018 and went on till 15 Oct, 2018.

The last 12 months saw TM's investors making profits in 6 months and incurring losses in 6 months. TM was less consistent in delivering monthly returs than SP500 index. TM significantly outperformed SP500 index in Jan 2018, when it returned +7.44% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. TM 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 TM and SP500 index significantly outperform during months when quarterly/annual results are announced.

Financial support is one thing, but I always think what becomes really sacrificial is your time.
-- Cliff Richard

TM 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 TM's volatility from 10 Sep, 2018 to 29 Oct, 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 TM 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.

TM has more chance of extreme outcomes than the SP500 index. Therefore, TM must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than TM.

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

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