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Forty percent of Amazon Growth Since 2012 Due to Few Daily Returns

The chart below shows that about 40% of the growth of $1 invested in Amazon stock since 2012 was due to four daily returns in excess of 10%

The top indicator chart shows daily returns since 01/2012. There are only four returns in excess of 10%.

The next chart shows the growth of $1 of the stock since 01/2012, which is $11.24.

The bottom chart shows the growth of $1 since 01/2012 if the four returns greater than 10% are set to 0%. The result is $6.61.

Therefore, 41% of the stock growth can be attributed to those four returns greater than 10%.

The conclusion is that in stocks with such return profile, only buy and hold works. Short-term and position traders on the average probably missed some of the large returns and their profits were lower as a result.

Or in other words, some return distributions with long right tails benefit only buy and holders and penalize short-term traders except the lucky or sophisticated ones.


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Charting and backtesting program: Amibroker

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