GIB investors doing a reality check
13 Dec, 201813 min read
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CGI GROUP INC (Foreign) is a falling knife that can bleed you if you catch it on Thursday. It lost -0.44% to close at 63.87. On a day when the overall market breadth was 35%, it closed higher than 80% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.
GIB is currently in a up trend. The previous long signal in GIB has not been profitable for investors in general. If you are invested in GIB at current levels please make sure that your allocation is limited and that your portfolio is well diversified.
GIB has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 9 days, GIB outperformed the SP500 index on 52% days.
During the last three months GIB was mostly loss making and delivered on average -0.03% per day. It's best return during this period (of +3.35%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -3.02%) was on Wednesday, 10 Oct, 2018. There was initially a bearish trend during this period which started on 21 Sep, 2018 and went on till 28 Sep, 2018. The trend delivered -2.73% losses to investors. This was followed by a bullish trend that started on 11 Oct, 2018 and ended on 16 Oct, 2018. This bullish trend delivered +4.85% to investors.
GIB had 9 profitable and 3 loss making months over the last year. GIB was profitable in more months than SP500 index. GIB significantly outperformed SP500 index in May 2018, when it returned +6.04% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. GIB had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year.
Greed is not a financial issue. It's a heart issue.
-- Andy Stanley
GIB 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 GIB's volatility from 14 Sep, 2018 to 2 Nov, 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 GIB 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 GIB. Therefore, SP500 must receive a lower allocation than GIB in your portfolio. SP500 index usually has shorter drawdown period than GIB.
Based on your interest in GIB you may find it interesting to know that BURL is a small cap that has shown remarkable performance and deserves to be on every investors' watchlist.
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