24.47 0.0 (0.0%) Sell

BAC investors re-evaluating their investment strategy

13 min read

BANK OF AMERICA CORP performed worse than the broader market on Tuesday. It fell by 0.0% to close at 24.47. It is currently trading -25% below it's 52 week high of 32.84.

[Themes containing BAC]

Buy-and-Hold investors in BAC experienced a maximum drawdown of -21.77% over the last three months. It fell by -21.06% during this strong bearish 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 +11.26%.


BAC has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 5 Jul, 2016 to 12 Mar, 2018. Over the last 2 years 11 months and 14 days, BAC outperformed the SP500 index on 49% days. Which indicates that on days BAC outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.

During the last three months BAC was mostly loss making and delivered on average -0.36% per day. It's best return during this period (of +2.69%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -5.43%) was on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 9 profitable days, which started on 29 Oct, 2018 and went on till 8 Nov, 2018. This bullish trend returned +9.05% to investors.

During the last year BAC had 6 profitable months and 6 loss making months. BAC returned profits in fewer months than SP500 index. BAC was also a more risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -13.84% compared to -7.75% returned by SP500 index in Dec 2018. BAC had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year. It is interesting to note that both BAC and SP500 index significantly outperform during months when quarterly/annual results are announced.

The hardest thing to understand in the world is the income tax.
-- Albert Einstein

BAC is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant fall in BAC's volatility from 19 Sep, 2018 to 3 Oct, 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 BAC has significant positive skewness in it's return distribution. This indicates that investors can expect BAC to recover from drawdowns quickly. Which makes BAC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

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

Based on your interest in BAC you may find it interesting to know that PRQR has shown remarkable performance this year and deserves to be on every investors' watchlist.

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