62.53 -0.95 (-1.51%) Sell

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

13 min read

PROSPERITY BANCSHARES INC was among the worst performers on Friday. It returned -1.51% to close at 62.53. On a day when the overall market breadth was 35%, it closed higher than 12% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing PB]

PB is currently in a down trend. The current bearish signal has generated a profit of +14.65% for investors in the last three months.


PB has been underperforming the SP500 index in recent time, after having outperformed till 26 Jan, 2017. Over the last 2 years 11 months and 10 days, PB outperformed the SP500 index on 52% days.

During the last three months PB was mostly loss making and delivered on average -0.24% per day. It's best return during this period (of +3.01%) was on Thursday, 25 Oct, 2018. While it's worst loss in the same period (of -4.56%) was on Thursday, 11 Oct, 2018. There was initially a bearish trend during this period which started on 26 Sep, 2018 and went on till 2 Oct, 2018. The trend delivered -4.81% losses to investors. This was followed by a bullish trend that started on 1 Nov, 2018 and ended on 8 Nov, 2018. This bullish trend delivered +7.17% to investors.

On monthly basis, PB delivered profits and losses in equal number of months. PB delivered profits less regularly than SP500 index. PB was also a more risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -9.89% compared to -7.28% returned by SP500 index in Oct 2018. PB had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year. It is interesting to note that both PB and SP500 index significantly outperform during months when quarterly/annual results are announced.

Some people dream of success, while other people get up every morning and make it happen.
-- Wayne Huizenga

PB is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in PB's volatility from 17 Sep, 2018 to 25 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 PB has significant positive skewness in it's return distribution. This indicates that investors can expect PB to recover from drawdowns quickly. Which makes PB a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

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

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