BIDU is a falling knife, continues to bleed every investor trying to catch it
18 Dec, 201813 min read
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BAIDU, INC. (Foreign) was among the worst performers today. It lost -1.32% to close at 167.61. It's recent 5 day performance has been -4.33%, -1.31%, +0.08%, +1.64% and -1.31%.
BIDU showed a strong down trend over the last 3 months. During this period BIDU lost -25.97% and saw a maximum drawdown of -27.32%. There was a short signal during this period which returned +25.97%.
BIDU has been underperforming the SP500 index in recent time, after having outperformed till 16 Oct, 2017. Over the last 2 years 11 months and 14 days, BIDU underperformed the SP500 index on 51% days.
During the last three months BIDU was mostly loss making and delivered on average -0.45% per day. It's best return during this period (of +6.0%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -4.63%) was on Wednesday, 24 Oct, 2018. There was initially a bearish trend during this period which started on 28 Sep, 2018 and went on till 10 Oct, 2018. The trend delivered -16.87% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 1 Nov, 2018. This bullish trend delivered +10.54% to investors.
BIDU had 6 profitable and 6 loss making months over the last year. During the last year, BIDU underperformed SP500 index on monthly return basis. BIDU was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -16.42% compared to -7.75% returned by SP500 index in Dec 2018. BIDU had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Oct 2018 to Dec 2018) during which period it delivered -28.34%. It is interesting to note that both BIDU and SP500 index significantly outperform during months when quarterly/annual results are announced.
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BIDU 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 BIDU's volatility from 1 Oct, 2018 to 2 Nov, 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 BIDU has significant negative skewness in it's return distribution. This indicates that BIDU is very risky for short-term investment and can significantly underperform for long durations.
Investors trading in BIDU 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 BIDU. Therefore, SP500 must receive a lower allocation than BIDU in your portfolio. SP500 index usually has shorter drawdown period than BIDU.
On a general note (since you are interested in BIDU), three small cap instruments that deserve special mention are BURL, PTC and AAXN. They have all outperformed the market and must be closely watched for investment opportunities.
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