7.6 -0.11 (-1.43%) Sell

BB is a falling knife, continues to bleed every investor trying to catch it

13 min read

BB delivered massive losses today. On a longer term basis, investors in BLACKBERRY LTD (Foreign) made +0.02% per day. Friday's performance of -1.43% was a significant underperformance compared to it's daily average.

[Themes containing BB]

BB showed a strong down trend over the last 3 months. During this period BB returned -24.83% and saw a maximum drawdown of -33.22%. There were 3 short signals during this period that returned a cumulative of +6.51% to investors.


BB has been underperforming the SP500 index in recent time, after having outperformed till 9 Jan, 2018. Over the last 2 years 11 months and 10 days, BB underperformed the SP500 index on 53% days.

BB returned losses on 64% days in the last three months. During this time, it delivered on average -0.42% per day. It delivered it's best daily return of +11.68%, during this period, on Friday, 28 Sep, 2018. There was initially a bullish trend during this period which started on 20 Sep, 2018 and went on till 24 Sep, 2018. The bullish trend returned +2.05% to investors. This was followed by a bearish trend that started on 4 Oct, 2018 and ended on 10 Oct, 2018. This bearish trend lost -12.55% of investor capital.

On monthly basis, BB delivered losses in more months over the last year, than profits. BB delivered profits less regularly than SP500 index. BB was also a more risky investment than SP500 index as it's worst month in the last year, Jun 2018, returned -18.43% compared to -7.28% returned by SP500 index in Oct 2018. BB had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Feb 2018 to Apr 2018) during which period it delivered -11.71%. It is interesting to note that both BB and SP500 index significantly outperform during months when quarterly/annual results are announced.

"The road to economic well-being is to reward productive economic activity and to provide a moderate and predictable growth of money to finance real economic growth without reigniting the fires of inflation.

BB is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in BB's volatility from 21 Sep, 2018 to 2 Oct, 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 BB has significant negative skewness in it's return distribution. This indicates that BB is very risky for short-term investment and can significantly underperform for long durations.

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

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

On a general note (since you are interested in BB), two small cap instruments that deserve special mention are AAXN and ZBRA. They have significantly outperformed the overall market.

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