52.87 -2.99 (-5.66%) Sell

Want to invest in IBKR? Avoid as it has destroyed investor wealth

13 min read

INTERACTIVE BROKERS GROUP, INC. has destroyed investor wealth on Friday. It returned -5.66% to close at 52.87. On a day when the overall market breadth was 35%, it closed higher than 83% of the market. In comparison, the benchmark SP500 index closed today at -0.0233%.

[Themes containing IBKR]

IBKR showed a down trend over the last 3 months. During this period IBKR returned -8.91% and saw a maximum drawdown of -9.9%. There was a short signal during this period which returned +8.91%.


IBKR has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 3 days, IBKR underperformed the SP500 index on 49% days. Which indicates that on days IBKR underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

IBKR returned losses on 60% days in the last three months. During this time, it delivered on average -0.32% per day. It delivered it's worst daily return of -5.66%, during this period, on Friday, 7 Dec, 2018. There was initially a bullish trend during this period which started on 18 Sep, 2018 and went on till 20 Sep, 2018. The bullish trend returned +2.16% to investors. This was followed by a bearish trend that started on 25 Sep, 2018 and ended on 1 Oct, 2018. This bearish trend lost -4.01% of investor capital.

On monthly basis, IBKR delivered profits and losses in equal number of months. IBKR delivered profits less regularly than SP500 index. IBKR significantly outperformed SP500 index in Apr 2018, when it returned +14.52% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. IBKR had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from May 2018 to Jul 2018) during which period it delivered -21.2%. It is interesting to note that both IBKR and SP500 index significantly outperform during months when quarterly/annual results are announced.

A stock broker is one who invests other people's money until its all gone.
-- Woody Allen

IBKR is becoming less volatile overall. In comparison, the SP500 index is seeing a fall in volatility. During the last three months, there was a significant surge in IBKR's volatility from 3 Oct, 2018 to 7 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 7 Dec, 2018.

Advanced/professional short-term investors should note that IBKR 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.

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

On a general note (since you are interested in IBKR), V is a large cap that deserves to be closely tracked for investment opportunities.

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