Search for alternative investments is on for TELECOM THEME investors as it underperforms broader market

Telecommunications is a falling knife that can bleed you if you catch it on Friday. It fell by -1.34% to close at 1195.39. It is currently trading -5% below it's 52 week high of 1262.86.

[Theme constituents]

~TELECOM is currently in a bullish trend. The previous long signal in ~TELECOM has not been profitable for investors in general. If you are invested in ~TELECOM at current levels please make sure that your allocation is limited and that your portfolio is well diversified.

Trend

Monthly Performance

Alpha (outperformance)

Heatmap

Volatility

Return distribution

~TELECOM has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 9 Mar, 2016 to 5 Sep, 2018. Over the last 2 years 11 months and 3 days, ~TELECOM underperformed the SP500 index on 47% days. Which indicates that on days ~TELECOM underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months ~TELECOM delivered losses on 51% days. However, it still managed to end this period in a profit. It's best return during this period (of +2.36%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -2.59%) was on Wednesday, 24 Oct, 2018. The longest stort-term trends during this period were 6 profitable and losing days. The bullish trend (which returned +4.97%) started on 29 Oct, 2018 and went on till 5 Nov, 2018 while the bearish trend (which returned -3.34%) started on 4 Oct, 2018 and went on till 11 Oct, 2018.

During the last year ~TELECOM had 7 profitable months and 5 loss making months. ~TELECOM returned profits in fewer months than SP500 index. ~TELECOM significantly outperformed SP500 index in Apr 2018, when it returned +6.24% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. ~TELECOM 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 ~TELECOM and SP500 index significantly outperform during months when quarterly/annual results are announced.

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.
-- Charles Dickens

~TELECOM 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 ~TELECOM's volatility from 5 Oct, 2018 to 1 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that ~TELECOM has significant positive skewness in it's return distribution. This indicates that investors can expect ~TELECOM to recover from drawdowns quickly. Which makes ~TELECOM 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 ~TELECOM. Therefore, SP500 must receive a lower allocation than ~TELECOM in your portfolio. SP500 index usually has shorter drawdown period than ~TELECOM.

Based on your interest in ~TELECOM you may find it interesting to know that TYHT and AYTU have both shown remarkable performance and deserve to be on every investors' watchlist.