VERMILION ENERGY INC. (FOREIGN)

20.89 -0.71 (-3.38%) Sell

VET is a falling knife, continues to bleed every investor trying to catch it

13 min read

VERMILION ENERGY INC. (Foreign) ranked among the worst performers on Monday. It fell by -3.38% to close at 20.89. On a day when the overall market breadth was 34%, it closed higher than 10% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing VET]

VET showed a strong bearish trend over the last 3 months. During this period VET fell by -34.9% and saw a maximum drawdown of -38.27%. There were 2 short signals during this period that returned a cumulative of +25.49% to investors.

Trend

VET has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 13 Dec, 2016 to 9 Nov, 2018. Over the last 2 years 11 months and 10 days, VET underperformed the SP500 index on 52% days.

During the last three months VET was mostly loss making and delivered on average -0.65% per day. It's best return during this period (of +4.64%) was on Wednesday, 21 Nov, 2018. While it's worst loss in the same period (of -5.29%) was on Tuesday, 20 Nov, 2018. The longest stort-term trend during this period was 6 losing days, which started on 23 Oct, 2018 and ended on 30 Oct, 2018. This bearish trend lost -10.21% of investor capital.

During the last year VET had 5 profitable months and 7 loss making months. VET returned profits in fewer months than SP500 index. VET was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -20.69% compared to -7.28% returned by SP500 index in Oct 2018. VET 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 VET and SP500 index significantly outperform during months when quarterly/annual results are announced.

"A bull market is very much like being in love. You don't realise its value till It's gone.

VET 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 VET's volatility from 18 Sep, 2018 to 14 Dec, 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 VET has positive skewness in it's return distribution. This indicates that investors can expect VET to make attempts to recover from drawdowns quickly. Which makes VET a good candidate for momentum based trading on short-term bullish trends or counter-trends.

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

On a general note (since you are interested in VET), three large cap instruments that deserve special mention are UNH, AMZN and MSFT. They have all outperformed the market and must be closely watched for investment opportunities.

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