36.53 -0.78 (-2.14%) Sell

Waiting to invest in TSM? Avoid at the moment as it ranked among the worst performers

13 min read

TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD (Foreign) ranked among the worst performers on Friday. It delivered -2.14% to close at 36.53. On a day when the overall market breadth was 35%, it closed higher than 77% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing TSM]

TSM showed a strong bearish trend over the last 3 months. During this period TSM delivered -16.52% and saw a maximum drawdown of -20.61%. There was a short signal during this period which returned +13.91%.


TSM has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 12 Jan, 2016 to 22 Jan, 2018. Over the last 2 years 11 months and 10 days, TSM outperformed the SP500 index on 52% days.

During the last three months TSM was mostly loss making and delivered on average -0.27% per day. It's best return during this period (of +3.99%) was on Tuesday, 30 Oct, 2018. While it's worst loss in the same period (of -4.28%) was on Friday, 16 Nov, 2018. The longest stort-term trend during this period was 6 losing days, which started on 4 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -11.06% of investor capital.

The last 12 months saw TSM's investors making profits in 6 months and incurring losses in 6 months. TSM was less consistent in delivering monthly returs than SP500 index. TSM was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -14.69% compared to -7.28% returned by SP500 index in Oct 2018. TSM had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both TSM and SP500 index significantly outperform during months when quarterly/annual results are announced.

Empty pockets never held anyone back. Only empty heads and empty hearts can do that.
-- Norman Vincent Peale

TSM 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 surge in TSM's volatility from 21 Sep, 2018 to 30 Oct, 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 TSM has significant positive skewness in it's return distribution. This indicates that investors can expect TSM to recover from drawdowns quickly. Which makes TSM a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

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

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