WEYERHAEUSER CO

24.5 -0.22 (-0.89%) Sell

Don't even consider investing in WY now, it is a high risk investment

13 min read

WEYERHAEUSER CO is a falling knife that can bleed you if you catch it on Thursday. It fell by -0.89% to close at 24.5 which is it's 52 week low, down -36% from it's 52 week high.

[Themes containing WY]

WY showed a strong bearish trend over the last 3 months. During this period WY fell by -27.88% and saw a maximum drawdown of -27.88%. There was a short signal during this period which returned +27.17%.

Trend

WY has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 29 Apr, 2016 to 4 Dec, 2018. Over the last 2 years 11 months and 9 days, WY underperformed the SP500 index on 51% days.

During the last three months WY was mostly loss making and delivered on average -0.5% per day. It's best return during this period (of +6.45%) was on Thursday, 6 Dec, 2018. While it's worst loss in the same period (of -8.5%) was on Friday, 26 Oct, 2018. The longest stort-term trend during this period was 5 losing days, which started on 9 Oct, 2018 and ended on 15 Oct, 2018. This bearish trend lost -9.46% of investor capital.

During the last year WY had 4 profitable months and 8 loss making months. WY returned profits in fewer months than SP500 index. WY was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -16.44% compared to -7.28% returned by SP500 index in Oct 2018. WY had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Sep 2018 to Dec 2018) during which period it delivered -31.53%. It is interesting to note that both WY and SP500 index significantly outperform during months when quarterly/annual results are announced.

Fortune sides with him who dares.
-- Virgil

WY 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 WY's volatility from 18 Sep, 2018 to 7 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 WY has significant positive skewness in it's return distribution. This indicates that investors can expect WY to recover from drawdowns quickly. Which makes WY a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in WY 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 WY. Therefore, SP500 must receive a lower allocation than WY in your portfolio. SP500 index usually has shorter drawdown period than WY.

On a general note (since you are interested in WY), two mid cap instruments that deserve special mention are TWTR and AMD. They have significantly outperformed the overall market.

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