131.55 -7.52 (-5.72%) Sell

FB investors dump it for better alternatives

13 min read

FACEBOOK INC was among the worst performers today. It lost -5.72% to close at 131.55. During the last week it lost -7.46% and saw a maximum drawdown of -8.79% before bouncing back.

[Themes containing FB]

FB is currently in a down trend. The current bearish signal has generated a profit of +23.74% for investors in the last three months.


FB has been underperforming the SP500 index in recent time, after having outperformed till 25 Jul, 2018. FB is currently at it's worst performance to the SP500 index and therefore does not make a good investment candidate. Over the last 2 years and 11 months, FB underperformed the SP500 index on 47% days. Which indicates that on days FB underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months FB was mostly loss making and delivered on average -0.4% per day. It's best return during this period (of +3.81%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -5.72%) was on Monday, 19 Nov, 2018. There was initially a bullish trend during this period which started on 20 Aug, 2018 and went on till 22 Aug, 2018. The bullish trend returned +0.66% to investors. This was followed by a bearish trend that started on 31 Aug, 2018 and ended on 6 Sep, 2018. This bearish trend lost -8.79% of investor capital.

FB had 5 profitable and 7 loss making months over the last year. During the last year, FB underperformed SP500 index on monthly return basis. FB was also a more risky investment than SP500 index as it's worst month in the last year, Nov 2018, returned -13.33% compared to -7.28% returned by SP500 index in Oct 2018. FB 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 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 becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in FB's volatility from 29 Aug, 2018 to 31 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 20 Aug, 2018 to 29 Oct, 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 'Bear Put Spread' 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), two instruments that deserve special mention are MLNT and ~SMALLCAP. They have significantly outperformed the overall market.

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