Search for alternative investments is on for TSLA investors as it underperforms
18 Dec, 201813 min read
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TESLA, INC. has destroyed investor wealth on Tuesday. It lost -3.27% to close at 337.03. It is currently trading +34% above it's 52 week low of 250.56 and is down only -11% from it's 52 week high.
TSLA is currently in a up trend. Over the last three months Buy-and-Hold has been a better strategy (returning +12.71%) for TSLA's investors than trading long signals.
TSLA has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 14 days, TSLA outperformed the SP500 index on 50% days. Which indicates that on days TSLA outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.
TSLA was profitable on 50% days in the last three months. During this time, it delivered on average +0.28% per day. It delivered it's best daily return of +17.35%, during this period, on Monday, 1 Oct, 2018. There was initially a bullish trend during this period which started on 21 Sep, 2018 and went on till 26 Sep, 2018. The bullish trend returned +3.74% to investors. This was followed by a bearish trend that started on 2 Oct, 2018 and ended on 8 Oct, 2018. This bearish trend lost -20.99% of investor capital.
TSLA had 6 profitable and 6 loss making months over the last year. During the last year, TSLA underperformed SP500 index on monthly return basis. TSLA was also a more risky investment than SP500 index as it's worst month in the last year, Mar 2018, returned -22.42% compared to -7.75% returned by SP500 index in Dec 2018. TSLA 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 TSLA and SP500 index significantly outperform during months when quarterly/annual results are announced.
"Great businesses produce great results
TSLA 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 fall in TSLA's volatility from 19 Sep, 2018 to 27 Sep, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that TSLA 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.
Investors trading in TSLA derivatives at this moment can consider 'Long Straddle' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than TSLA. Therefore, SP500 must receive a lower allocation than TSLA in your portfolio. SP500 index usually has shorter drawdown period than TSLA.
On a general note (since you are interested in TSLA), two instruments that deserve special mention are RGSE and AMRH. They have significantly outperformed the overall market.
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