RETAIL THEME investors dump it for better alternatives
18 Dec, 201814 min read
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Retail ranked among the worst performers today. It grew by +0.33% to close at 1233.74. During the last week it lost -3.58% and saw a maximum drawdown of -3.9% before bouncing back.
Buy-and-Hold investors in ~RETAIL experienced a maximum drawdown of -12.06% over the last three months. It lost -10.96% during this strong down 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 +8.67%.
~RETAIL has been underperforming the SP500 index in recent time, after having outperformed till 6 Nov, 2018. Over the last 2 years 2 months and 1 days, ~RETAIL outperformed the SP500 index on 52% days.
During the last three months ~RETAIL was mostly loss making and delivered on average -0.18% per day. It's best return during this period (of +2.23%) was on Wednesday, 28 Nov, 2018. While it's worst loss in the same period (of -3.42%) was on Tuesday, 20 Nov, 2018. There was initially a bullish trend during this period which started on 29 Oct, 2018 and went on till 6 Nov, 2018. The bullish trend returned +5.32% to investors. This was followed by a bearish trend that started on 9 Nov, 2018 and ended on 20 Nov, 2018. This bearish trend lost -8.61% of investor capital.
~RETAIL had 6 profitable and 6 loss making months over the last year. During the last year, ~RETAIL underperformed SP500 index on monthly return basis. ~RETAIL was also a less risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -7.04% compared to -7.75% returned by SP500 index in Dec 2018. ~RETAIL had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year. It is interesting to note that both ~RETAIL and SP500 index significantly outperform during months when quarterly/annual results are announced.
I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.
-- Warren Buffett
~RETAIL 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 ~RETAIL's volatility from 1 Oct, 2018 to 20 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 ~RETAIL has significant positive skewness in it's return distribution. This indicates that investors can expect ~RETAIL to recover from drawdowns quickly. Which makes ~RETAIL a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
~RETAIL has more chance of extreme outcomes than the SP500 index. Therefore, ~RETAIL must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than ~RETAIL.
On a general note (since you are interested in ~RETAIL), SQ is a mid cap that deserves to be closely tracked for investment opportunities.
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