10.57 -0.34 (-3.21%) Sell

Don't buy FCX now, it is a high risk investment

13 min read

FREEPORT-MCMORAN INC ranked among the worst performers today. It returned -3.21% to close at 10.57. It's recent 5 day performance has been -1.36%, +2.88%, +0.65%, -2.11% and -2.06%.

[Themes containing FCX]

FCX showed a strong down trend over the last 3 months. During this period FCX returned -22.96% and saw a maximum drawdown of -27.65%. There was a short signal during this period which returned +22.96%.


FCX has been underperforming the SP500 index in recent time, after having outperformed till 2 Jan, 2018. Over the last 2 years 11 months and 10 days, FCX outperformed the SP500 index on 50% days. Which indicates that on days FCX outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.

FCX returned losses on 56% days in the last three months. During this time, it delivered on average -0.37% per day. It delivered it's worst daily return of -7.84%, during this period, on Wednesday, 24 Oct, 2018. There was initially a bullish trend during this period which started on 17 Sep, 2018 and went on till 21 Sep, 2018. The bullish trend returned +6.34% to investors. This was followed by a bearish trend that started on 16 Oct, 2018 and ended on 24 Oct, 2018. This bearish trend lost -17.73% of investor capital.

On monthly basis, FCX delivered losses in more months over the last year, than profits. FCX delivered profits less regularly than SP500 index. FCX was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -14.96% compared to -7.28% returned by SP500 index in Oct 2018. FCX had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Jan 2018 to Apr 2018) during which period it delivered -22.79%.

It's pointless to set goals if you are not going to try to hit them.
-- Don Connelly

FCX 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 FCX's volatility from 17 Sep, 2018 to 29 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 FCX 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 FCX 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 FCX. Therefore, SP500 must receive a lower allocation than FCX in your portfolio. SP500 index usually has shorter drawdown period than FCX.

On a general note (since you are interested in FCX), three instruments that are extremely volatile are IX, NVCN and ICPT. They must all be evaluated prudently and investors are better off avoiding them at the moment.

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