Below is a chart of Simon Property Group (SPG) from 1994 to 2019 reflecting the year-over-year (YoY) percentage change. This assessment reviews the probability of performance in the coming year.
In the last 12 months, Simon Property Group has declined as much as -76%, on a YoY basis. Below is the history of returns when Simon Property Group has declined by -61% since 1994 (level of YoY decline as of April 9, 2020).
Following a similar decline of -61%, had Simon Property Group (SPG) been acquired and held for 1 year, the average return of +238% with a high level of probability. There is one problem with is “probability” set, a sample of one is not enough to be confident enough about the prospects.
The YoY chart has a very important feature that an investor should not overlook when considering the data.
As Charles H. Dow, co-founder of the Wall Street Journal and namesake to the famous indexes, has repeatedly said, precedent is key to gauging current conditions. With this in mind, we want to draw your attention to the 2008/2009 period where SPG had declined –60% then rose to a level of –30% and finally collapsed to –70% by March 6, 2009.
The actual price change in this period is depicted below:
If the current low in SPG were to replicate the price action seen in 2008-2009 lows, there is the risk that the price could decline to $28.97 (31% of $42.25) before “permanently” recovering to record highs.
Next Up: SPG Dividend/Yield Profile
See Also: Why the focus on Price?