CSCO is a falling knife, continues to bleed every investor trying to catch it
18 Dec, 201813 min read
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CISCO SYSTEMS, INC. delivered massive losses today. It lost -0.32% to close at 44.06. It's recent 5 day performance has been -3.54%, -3.48%, +0.11%, +0.7% and +0.49%.
CSCO showed a down trend over the last 3 months. During this period CSCO lost -6.81% and saw a maximum drawdown of -10.79%. There was a short signal during this period which returned +0.14%.
CSCO has been underperforming the SP500 index in recent time, after having outperformed till 6 Dec, 2018. Over the last 2 years 11 months and 14 days, CSCO outperformed the SP500 index on 57% days.
During the last three months CSCO was mostly loss making and delivered on average -0.09% per day. It's best return during this period (of +5.5%) was on Thursday, 15 Nov, 2018. While it's worst loss in the same period (of -4.03%) was on Friday, 7 Dec, 2018. There was initially a bearish trend during this period which started on 4 Oct, 2018 and went on till 11 Oct, 2018. The trend delivered -10.63% losses to investors. This was followed by a bullish trend that started on 26 Nov, 2018 and ended on 3 Dec, 2018. This bullish trend delivered +9.11% to investors.
CSCO had 7 profitable and 5 loss making months over the last year. During the last year, CSCO underperformed SP500 index on monthly return basis. CSCO significantly outperformed SP500 index in Aug 2018, when it returned +12.96% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. CSCO 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 CSCO and SP500 index significantly outperform during months when quarterly/annual results are announced.
Everyday is a bank account, and time is our currency. No one is rich, no one is poor, we've got 24 hours each.
-- Christopher Rice
CSCO 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 CSCO's volatility from 19 Sep, 2018 to 29 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 CSCO 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 CSCO derivatives at this moment can consider 'Long Straddle' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than CSCO. Therefore, SP500 must receive a lower allocation than CSCO in your portfolio. SP500 index usually has shorter drawdown period than CSCO.
On a general note (since you are interested in CSCO), ABMD is a mid cap that deserves to be closely tracked for investment opportunities.
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