1027.42 -39.29 (-3.82%) Sell

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

13 min read

ALPHABET INC. significantly underperformed on Monday. It fell by -3.82% to close at 1027.42. It is currently trading -20% below it's 52 week high of 1285.5.

[Themes containing GOOGL]

GOOGL showed a strong bearish trend over the last 3 months. During this period GOOGL fell by -15.92% and saw a maximum drawdown of -18.76%. There was a short signal during this period which returned +11.42%.


GOOGL has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 30 Jun, 2016 to 26 Jul, 2018. Over the last 2 years and 11 months, GOOGL outperformed the SP500 index on 54% days.

During the last three months GOOGL was mostly loss making and delivered on average -0.25% per day. It's best return during this period (of +4.4%) was on Thursday, 25 Oct, 2018. While it's worst loss in the same period (of -5.18%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 7 losing days, which started on 30 Aug, 2018 and ended on 10 Sep, 2018. This bearish trend lost -7.29% of investor capital.

During the last year GOOGL had 7 profitable months and 5 loss making months. GOOGL returned profits in fewer months than SP500 index. GOOGL significantly outperformed SP500 index in Jan 2018, when it returned +10.16% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. GOOGL had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both GOOGL and SP500 index significantly outperform during months when quarterly/annual results are announced.

"Cash combined with courage in a time of crisis is priceless.

GOOGL is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in GOOGL's volatility from 29 Aug, 2018 to 29 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 GOOGL 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 GOOGL derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.

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

Based on your interest in GOOGL you may find it interesting to know that BURL and HQY are both small caps that have shown remarkable performance and deserve to be on every investors' watchlist.

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