44.9 -0.21 (-0.47%) Sell

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

13 min read

ETFC was among the worst performers today. On a longer term basis, investors in E TRADE FINANCIAL CORP made -0.1% per day. Tuesday's performance of -0.47% was a underperformance compared to it's daily average.

[Themes containing ETFC]

ETFC showed a strong bearish trend over the last 3 months. During this period ETFC delivered -16.09% and saw a maximum drawdown of -20.14%. There were 2 short signals during this period that returned a cumulative of +9.76% to investors.


ETFC has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 5 Jul, 2016 to 22 May, 2018. Over the last 2 years 11 months and 7 days, ETFC outperformed the SP500 index on 53% days.

ETFC was profitable on 52% days in the last three months. During this time, it delivered on average -0.26% per day. It delivered it's worst daily return of -8.05%, during this period, on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 11 profitable days, which started on 25 Oct, 2018 and went on till 8 Nov, 2018. This bullish trend returned +14.36% to investors.

The last 12 months saw ETFC's investors making profits in 5 months and incurring losses in 7 months. ETFC was less consistent in delivering monthly returs than SP500 index. ETFC was also a more risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -14.13% compared to -7.28% returned by SP500 index in Oct 2018. ETFC had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Jun 2018 to Oct 2018) during which period it delivered -23.65%. It is interesting to note that both ETFC and SP500 index significantly outperform during months when quarterly/annual results are announced.

An investment in knowledge pays the best interest.
-- Benjamin Franklin

ETFC 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 ETFC's volatility from 18 Sep, 2018 to 7 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 ETFC has significant positive skewness in it's return distribution. This indicates that investors can expect ETFC to recover from drawdowns quickly. Which makes ETFC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in ETFC 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 ETFC. Therefore, SP500 must receive a lower allocation than ETFC in your portfolio. SP500 index usually has shorter drawdown period than ETFC.

On a general note (since you are interested in ETFC), two instruments that have delivered similar performance as ETFC are FSS and UHS. They are suitable as good alternative investment candidates that can diversify your portfolio.

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