TWLO investors herd to book profits while the going is good
07 Dec, 201813 min read
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TWLO delivered massive losses today. On a longer term basis, investors in TWILIO INC made -0.11% per day. Friday's performance of -7.13% was a significant underperformance compared to it's daily average.
TWLO showed a up trend over the last 3 months. During this period TWLO gained +5.95% and saw a maximum drawdown of -27.05%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in TWLO till volatility reduces and a clear trend emerges.
TWLO has been outperforming the SP500 index in recent time. Over the last 2 years 5 months and 14 days, TWLO outperformed the SP500 index on 51% days.
TWLO was profitable on 50% days in the last three months. During this time, it delivered on average +0.27% per day. It delivered it's best daily return of +35.44%, during this period, on Wednesday, 7 Nov, 2018. There was initially a bearish trend during this period which started on 16 Oct, 2018 and went on till 19 Oct, 2018. The trend delivered -13.3% losses to investors. This was followed by a bullish trend that started on 29 Oct, 2018 and ended on 1 Nov, 2018. This bullish trend delivered +15.62% to investors.
TWLO had 10 profitable and 2 loss making months over the last year. TWLO was profitable in more months than SP500 index. TWLO significantly outperformed SP500 index in Aug 2018, when it returned +39.33% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. TWLO had a longer winning streak of profitable months than SP500 index. It went up in 9 straight months (from Jan 2018 to Sep 2018) during which period it delivered +141.45%.
Success is walking from failure to failure with no loss of enthusiasm.
-- Winston Churchill
TWLO is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in TWLO's volatility from 10 Sep, 2018 to 16 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 TWLO 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 TWLO derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than TWLO. Therefore, SP500 must receive a lower allocation than TWLO in your portfolio. SP500 index usually has shorter drawdown period than TWLO.
On a general note (since you are interested in TWLO), if you are evaluating TWLO as an investment candidate, then you should read about SAGE which has delivered similar performance and can help diversify your portfolio.
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