Diversified THEME

957.74 +4.8 (+0.5%) Sell

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

13 min read

Diversified is a falling knife that can bleed you if you catch it on Tuesday. It grew by +0.5% to close at 957.74. It is currently trading -27% below it's 52 week high of 1316.96.

[Theme constituents]

~DIVERSIFIED is currently in a down trend. Over the last three months trading short signals has not been a profitable strategy for ~DIVERSIFIED's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -5.48%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to ~DIVERSIFIED.


~DIVERSIFIED has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 14 days, ~DIVERSIFIED underperformed the SP500 index on 50% days. Which indicates that on days ~DIVERSIFIED underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months ~DIVERSIFIED delivered profits on 57% days. However, it still managed to end this period in a loss. It's best return during this period (of +2.75%) was on Wednesday, 24 Oct, 2018. While it's worst loss in the same period (of -4.88%) was on Friday, 2 Nov, 2018. There was initially a bearish trend during this period which started on 2 Nov, 2018 and went on till 7 Nov, 2018. The trend delivered -10.89% losses to investors. This was followed by a bullish trend that started on 19 Nov, 2018 and ended on 27 Nov, 2018. This bullish trend delivered +8.01% to investors.

On monthly basis, ~DIVERSIFIED delivered losses in more months over the last year, than profits. ~DIVERSIFIED delivered profits less regularly than SP500 index. ~DIVERSIFIED was also a more risky investment than SP500 index as it's worst month in the last year, Apr 2018, returned -8.18% compared to -7.75% returned by SP500 index in Dec 2018. ~DIVERSIFIED had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Feb 2018 to May 2018) during which period it delivered -21.97%. It is interesting to note that both ~DIVERSIFIED and SP500 index significantly outperform during months when quarterly/annual results are announced.

"Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community.

~DIVERSIFIED is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in ~DIVERSIFIED's volatility from 23 Oct, 2018 to 7 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that ~DIVERSIFIED has significant positive skewness in it's return distribution. This indicates that investors can expect ~DIVERSIFIED to recover from drawdowns quickly. Which makes ~DIVERSIFIED a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in ~DIVERSIFIED), PFE is a large cap that deserves to be closely tracked for investment opportunities.

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