Prayers for VRSN investors as it was among the worst performers
14 Dec, 201813 min read
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VERISIGN INC ranked among the worst performers today. It delivered -2.32% to close at 152.67. It's recent 5 day performance has been -0.52%, +1.09%, -1.01%, +1.98% and -2.19%.
VRSN is currently in a bearish trend. Over the last three months trading short signals has not been a profitable strategy for VRSN's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -5.41%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to VRSN.
VRSN has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 23 Dec, 2016 to 2 Nov, 2018. Over the last 2 years 11 months and 10 days, VRSN outperformed the SP500 index on 57% days.
During the last three months VRSN was mostly loss making and delivered on average -0.05% per day. It's best return during this period (of +17.2%) was on Friday, 2 Nov, 2018. While it's worst loss in the same period (of -5.1%) was on Wednesday, 24 Oct, 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 -12.4% of investor capital.
The last 12 months saw VRSN's investors making profits in 10 months and incurring losses in 2 months. During the last year, VRSN delivered profits in more months than SP500 index. VRSN significantly outperformed SP500 index in May 2018, when it returned +11.09% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. VRSN 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 +39.75%.
Minimizing downside risk while maximizing the upside is a powerful concept.
-- Mohnish Pabrai
VRSN 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 VRSN's volatility from 3 Oct, 2018 to 2 Nov, 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 VRSN 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.
SP500 index has more chance of extreme outcomes than VRSN. Therefore, SP500 must receive a lower allocation than VRSN in your portfolio. SP500 index usually has shorter drawdown period than VRSN.
Based on your interest in VRSN you may find it interesting to know that CSCO is a large cap that has shown remarkable performance and deserves to be on every investors' watchlist.
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