147.57 -2.43 (-1.65%) Buy

Search for alternative investments is on for FB investors as it underperforms

13 min read

FACEBOOK INC was among the worst performers on Tuesday. It fell by -1.65% to close at 147.57. On a day when the overall market breadth was 35%, it closed higher than 4% of the market. In comparison, the benchmark SP500 index closed today at -0.0142%.

[Themes containing FB]

FB is currently in a bullish trend. Over the last three months Buy-and-Hold has been a better strategy (returning -4.42%) for FB's investors than trading long signals.


FB has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 25 Jul, 2018 to 19 Nov, 2018. Over the last 3 years and 1 month, FB outperformed the SP500 index on 52% days.

During the last three months FB delivered profits on 52% days. However, it still managed to end this period in a loss. It's best return during this period (of +8.16%) was on Wednesday, 26 Dec, 2018. While it's worst loss in the same period (of -7.25%) was on Wednesday, 19 Dec, 2018. The longest stort-term trend during this period was 4 profitable days, which started on 28 Nov, 2018 and went on till 3 Dec, 2018. This bullish trend returned +4.43% to investors.

During the last year FB had 5 profitable months and 7 loss making months. FB returned profits in fewer months than SP500 index. FB was also a more risky investment than SP500 index as it's worst month in the last year, Jul 2018, returned -12.56% compared to -9.94% returned by SP500 index in Dec 2018. FB had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Sep 2018 to Dec 2018) during which period it delivered -25.61%. It is interesting to note that both FB and SP500 index significantly outperform during months when quarterly/annual results are announced.

"Beware of little expenses. A small leak will sink a great ship.

FB is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing decrease in volatility. During the last three months, there was a significant surge in FB's volatility from 23 Oct, 2018 to 26 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 27 Nov, 2018 to 27 Dec, 2018.

Advanced/professional short-term investors should note that FB 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 FB derivatives at this moment can consider 'Married Call' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in FB), three small cap instruments that deserve special mention are KEYS, BURL and ZBRA. They have all outperformed the market and must be closely watched for investment opportunities.

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