PCG is a falling knife, continues to bleed every investor trying to catch it
07 Dec, 201813 min read
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PG&E CORP is a falling knife that can bleed you if you catch it today. It fell by -0.92% to close at 25.79. It's recent 5 day performance has been -2.69%, -1.33%, +2.77%, -1.42% and -2.55%.
PCG showed a strong bearish trend over the last 3 months. During this period PCG fell by -44.24% and saw a maximum drawdown of -63.77%. There was a short signal during this period which returned +35.4%.
PCG has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 27 Jun, 2016 to 15 Nov, 2018. Over the last 2 years 11 months and 3 days, PCG underperformed the SP500 index on 49% days. Which indicates that on days PCG underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
PCG returned losses on 54% days in the last three months. During this time, it delivered on average -0.63% per day. It delivered it's best daily return of +37.54%, during this period, on Friday, 16 Nov, 2018. The longest stort-term trend during this period was 6 losing days, which started on 8 Nov, 2018 and ended on 15 Nov, 2018. This bearish trend lost -89.18% of investor capital.
During the last year PCG had 4 profitable months and 8 loss making months. PCG returned profits in fewer months than SP500 index. PCG was also a more risky investment than SP500 index as it's worst month in the last year, Nov 2018, returned -43.64% compared to -7.28% returned by SP500 index in Oct 2018. PCG 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 -9.3%. It is interesting to note that both PCG and SP500 index significantly outperform during months when quarterly/annual results are announced.
"It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.
PCG 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 PCG's volatility from 20 Sep, 2018 to 12 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that PCG 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 PCG 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 PCG. Therefore, SP500 must receive a lower allocation than PCG in your portfolio. SP500 index usually has shorter drawdown period than PCG.
Based on your interest in PCG you may find it interesting to know that AMD, TWTR and ABMD are mid caps that have all shown remarkable performance and qualify to be on every investor's watchlist.
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