36.47 -0.08 (-0.22%) Sell

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

13 min read

HFF, INC. delivered massive losses on Tuesday. It fell by -0.22% to close at 36.47. On a day when the overall market breadth was 35%, it closed higher than 8% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.

[Themes containing HF]

HF showed a strong bearish trend over the last 3 months. During this period HF fell by -20.09% and saw a maximum drawdown of -23.36%. There was a short signal during this period which returned +15.44%.


HF has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 5 Apr, 2017 to 2 Apr, 2018. Over the last 2 years 11 months and 7 days, HF underperformed the SP500 index on 45% days. Which indicates that on days HF underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months HF was mostly loss making and delivered on average -0.34% per day. It's best return during this period (of +3.84%) was on Thursday, 15 Nov, 2018. While it's worst loss in the same period (of -6.18%) was on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 7 profitable days, which started on 21 Nov, 2018 and went on till 30 Nov, 2018. This bullish trend returned +9.85% to investors.

During the last year HF had 6 profitable months and 6 loss making months. HF returned profits in fewer months than SP500 index. HF significantly outperformed SP500 index in Jul 2018, when it returned +29.34% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. HF had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year.

Believe you can and you're halfway there.
-- Theodore Roosevelt

HF is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in HF's volatility from 18 Sep, 2018 to 7 Dec, 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 HF has significant positive skewness in it's return distribution. This indicates that investors can expect HF to recover from drawdowns quickly. Which makes HF a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in HF), two instruments that deserve special mention are TNDM and HEAR. They have significantly outperformed the overall market this year.

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