BX shows sign of weakness as investors do cost averaging
11 Dec, 201813 min read
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BLACKSTONE GROUP L.P. showed marginal outperformance on Tuesday. It increased by +0.1% to close at 30.52. On a day when the overall market breadth was 35%, it closed higher than 8% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.
BX showed a strong bearish trend over the last 3 months. During this period BX fell by -14.75% and saw a maximum drawdown of -23.33%. There were 2 short signals during this period that returned a cumulative of +8.62% to investors.
BX has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 4 Mar, 2016 to 14 May, 2018. Over the last 2 years 11 months and 7 days, BX underperformed the SP500 index on 51% days.
During the last three months BX was mostly loss making and delivered on average -0.22% per day. It's best return during this period (of +4.65%) was on Wednesday, 21 Nov, 2018. While it's worst loss in the same period (of -6.4%) was on Wednesday, 10 Oct, 2018. The longest stort-term trend during this period was 6 losing days, which started on 4 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -11.82% of investor capital.
During the last year BX had 7 profitable months and 5 loss making months. BX returned profits in fewer months than SP500 index. BX was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -16.51% compared to -7.28% returned by SP500 index in Oct 2018. BX had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year.
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BX 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 BX's volatility from 13 Sep, 2018 to 11 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that BX has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.
Investors trading in BX derivatives at this moment can consider 'Calendar Spread' options strategy to receive better risk-adjusted returns.
BX has more chance of extreme outcomes than the SP500 index. Therefore, BX must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than BX.
On a general note (since you are interested in BX), BURL is a small cap that deserves to be closely tracked for investment opportunities.
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