Financial THEME

1301.72 +1.4 (+0.11%) Sell

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FINANCIAL THEME investors dump it

14 min read

Financial is a falling knife that can bleed you if you catch it on Tuesday. It delivered +0.11% to close at 1301.72. It is currently trading -18% below it's 52 week high of 1604.09.

[Theme constituents]

Buy-and-Hold investors in ~FINANCIAL experienced a maximum drawdown of -14.81% over the last three months. It fell by -13.9% during this strong bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +11.59%.

Trend

~FINANCIAL has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 6 Jul, 2016 to 1 Feb, 2018. Over the last 2 years 11 months and 14 days, ~FINANCIAL outperformed the SP500 index on 50% days. Which indicates that on days ~FINANCIAL outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.

During the last three months ~FINANCIAL was mostly loss making and delivered on average -0.23% per day. It's best return during this period (of +2.31%) was on Wednesday, 28 Nov, 2018. While it's worst loss in the same period (of -3.56%) was on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 9 profitable days, which started on 29 Oct, 2018 and went on till 8 Nov, 2018. This bullish trend returned +5.67% to investors.

During the last year ~FINANCIAL had 5 profitable months and 7 loss making months. ~FINANCIAL returned profits in fewer months than SP500 index. ~FINANCIAL was also a more risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -8.32% compared to -7.75% returned by SP500 index in Dec 2018. ~FINANCIAL had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year. It is interesting to note that both ~FINANCIAL and SP500 index significantly outperform during months when quarterly/annual results are announced.

"I grew up in Finance.

~FINANCIAL 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 ~FINANCIAL's volatility from 8 Oct, 2018 to 4 Dec, 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 ~FINANCIAL has significant positive skewness in it's return distribution. This indicates that investors can expect ~FINANCIAL to recover from drawdowns quickly. Which makes ~FINANCIAL a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

Based on your interest in ~FINANCIAL you may find it interesting to know that PTC is a small cap that has shown remarkable performance and deserves to be on every investors' watchlist.

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