21.12 -0.21 (-0.98%) Buy

Search for alternative investments is on for ERJ investors as it performed worse than the broader market

13 min read

EMBRAER S.A. (Foreign) has destroyed investor wealth today. It lost -0.98% to close at 21.12. During the last week it lost -1.49% and saw a maximum drawdown of -2.81% before bouncing back.

[Themes containing ERJ]

ERJ is currently in a up trend. Over the last three months Buy-and-Hold has been a better strategy (returning +13.43%) for ERJ's investors than trading long signals.


ERJ has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, ERJ underperformed the SP500 index on 52% days.

ERJ returned losses on 59% days in the last three months. During this time, it delivered on average +0.23% per day. It delivered it's best daily return of +6.17%, during this period, on Thursday, 25 Oct, 2018. There was initially a bullish trend during this period which started on 25 Sep, 2018 and went on till 27 Sep, 2018. The bullish trend returned +6.06% to investors. This was followed by a bearish trend that started on 6 Nov, 2018 and ended on 13 Nov, 2018. This bearish trend lost -9.23% of investor capital.

ERJ had 6 profitable and 6 loss making months over the last year. During the last year, ERJ underperformed SP500 index on monthly return basis. ERJ was also a more risky investment than SP500 index as it's worst month in the last year, Jul 2018, returned -18.13% compared to -7.28% returned by SP500 index in Oct 2018. ERJ had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both ERJ and SP500 index significantly outperform during months when quarterly/annual results are announced.

Financial peace isn't the acquisition of stuff. It's learning to live on less than you make, so you can give money back and have money to invest. You can't win until you do this.
-- Dave Ramsey

ERJ 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 ERJ's volatility from 17 Sep, 2018 to 30 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 ERJ 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.

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

On a general note (since you are interested in ERJ), two instruments that have been extremely volatile in recent times are VIPS and NVCN. Investors in these instruments should consider reducing their exposure (to VIPS and NVCN) and diversifying their portfolios.

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