FIRST MAJESTIC SILVER CORP (FOREIGN)

5.15 -0.13 (-2.46%) Buy

AG investors doing a reality check

13 min read

FIRST MAJESTIC SILVER CORP (Foreign) is a falling knife that can bleed you if you catch it on Friday. It lost -2.46% to close at 5.15. On a day when the overall market breadth was 35%, it closed higher than 14% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing AG]

Buy-and-Hold investors in AG experienced a maximum drawdown of -24.13% over the last three months. It lost -9.33% during this 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 +6.84%.

Trend

AG has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, AG outperformed the SP500 index on 50% days. Which indicates that on days AG outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.

During the last three months AG was mostly loss making and delivered on average -0.11% per day. It's best return during this period (of +6.78%) was on Wednesday, 14 Nov, 2018. While it's worst loss in the same period (of -8.45%) was on Friday, 23 Nov, 2018. There was initially a bullish trend during this period which started on 10 Oct, 2018 and went on till 15 Oct, 2018. The bullish trend returned +10.43% to investors. This was followed by a bearish trend that started on 19 Oct, 2018 and ended on 25 Oct, 2018. This bearish trend lost -9.32% of investor capital.

AG had 6 profitable and 6 loss making months over the last year. During the last year, AG underperformed SP500 index on monthly return basis. AG was also a more risky investment than SP500 index as it's worst month in the last year, Aug 2018, returned -16.27% compared to -7.28% returned by SP500 index in Oct 2018. AG had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.

AG 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 AG's volatility from 18 Sep, 2018 to 28 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that AG has significant negative skewness in it's return distribution. This indicates that AG is very risky for short-term investment and can significantly underperform for long durations.

Investors trading in AG derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in AG), V is a large cap that deserves to be closely tracked for investment opportunities.

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