196.52 -1.39 (-0.71%) Sell

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

13 min read

BRKB was among the worst performers today. On a longer term basis, investors in BERKSHIRE HATHAWAY INC made -0.06% per day. Tuesday's performance of -0.71% was a underperformance compared to it's daily average.

[Themes containing BRKB]

BRKB showed a strong bearish trend over the last 3 months. During this period BRKB delivered -11.06% and saw a maximum drawdown of -12.17%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in BRKB till volatility reduces and a clear trend emerges.


BRKB has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 4 Jan, 2016 to 19 Nov, 2018. Over the last 2 years 11 months and 14 days, BRKB outperformed the SP500 index on 51% days.

BRKB was profitable on 53% days in the last three months. During this time, it delivered on average -0.17% per day. It delivered it's worst daily return of -4.84%, during this period, 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 +11.51% to investors.

The last 12 months saw BRKB's investors making profits in 5 months and incurring losses in 7 months. BRKB was less consistent in delivering monthly returs than SP500 index. BRKB was also a more risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -9.95% compared to -7.75% returned by SP500 index in Dec 2018. BRKB had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Feb 2018 to Jun 2018) during which period it delivered -11.42%. It is interesting to note that both BRKB and SP500 index significantly outperform during months when quarterly/annual results are announced.

Greed is not a financial issue. It's a heart issue.
-- Andy Stanley

BRKB 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 surge in BRKB's volatility from 5 Oct, 2018 to 11 Dec, 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 BRKB has significant positive skewness in it's return distribution. This indicates that investors can expect BRKB to recover from drawdowns quickly. Which makes BRKB a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in BRKB derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.

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

Based on your interest in BRKB you may find it interesting to know that TYHT, RGSE and AYTU have all shown remarkable performance and qualify to be on every investor's watchlist.

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