MAXLINEAR INC

18.85 -0.37 (-1.98%) Sell

Don't invest in MXL now, it is a really dangerous investment now

13 min read

MAXLINEAR INC has destroyed investor wealth on Thursday. It fell by -1.98% to close at 18.85. It is currently trading -32% below it's 52 week high of 28.0.

[Themes containing MXL]

MXL showed a bullish trend over the last 3 months. During this period MXL delivered +1.02% and saw a maximum drawdown of -23.77%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in MXL till volatility reduces and a clear trend emerges.

Trend

MXL has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 16 May, 2017 to 25 Oct, 2018. Over the last 2 years 11 months and 9 days, MXL outperformed the SP500 index on 51% days.

During the last three months MXL was mostly profitable and delivered on average +0.07% per day. It's best return during this period (of +14.11%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -6.43%) was on Friday, 5 Oct, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 17 Sep, 2018 and went on till 24 Sep, 2018. This bullish trend returned +7.97% to investors.

During the last year MXL had 5 profitable months and 7 loss making months. MXL returned profits in fewer months than SP500 index. MXL was also a more risky investment than SP500 index as it's worst month in the last year, May 2018, returned -17.82% compared to -7.28% returned by SP500 index in Oct 2018. MXL had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both MXL and SP500 index significantly outperform during months when quarterly/annual results are announced.

All intelligent investing is value investing - acquiring more than you are paying for. You must value the business in order to value the stock .
-- Charles Thomas Munger

MXL 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 MXL's volatility from 17 Sep, 2018 to 31 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 MXL 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 MXL. Therefore, SP500 must receive a lower allocation than MXL in your portfolio. SP500 index usually has shorter drawdown period than MXL.

On a general note (since you are interested in MXL), two instruments that deserve special mention are NSPR and ~SMALLCAP. They have significantly outperformed the overall market.

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