73.03 -0.73 (-1.0%) Sell

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

13 min read

REGAL BELOIT CORP significantly underperformed today. It returned -1.0% to close at 73.03. During the last week it returned -2.57% and saw a maximum drawdown of -3.17% before bouncing back.

[Themes containing RBC]

Buy-and-Hold investors in RBC experienced a maximum drawdown of -19.34% over the last three months. It returned -12.8% during this strong down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +5.21%.


RBC has been underperforming the SP500 index in recent time, after having outperformed till 20 Jul, 2017. Over the last 2 years 11 months and 10 days, RBC underperformed the SP500 index on 47% days. Which indicates that on days RBC underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

RBC returned losses on 58% days in the last three months. During this time, it delivered on average -0.2% per day. It delivered it's worst daily return of -4.34%, during this period, on Wednesday, 24 Oct, 2018. There was initially a bearish trend during this period which started on 21 Sep, 2018 and went on till 26 Sep, 2018. The trend delivered -4.05% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 5 Nov, 2018. This bullish trend delivered +10.54% to investors.

On monthly basis, RBC delivered profits in more months over the last year, than losses. RBC delivered profits less regularly than SP500 index. RBC was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -13.92% compared to -7.28% returned by SP500 index in Oct 2018. RBC had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both RBC and SP500 index significantly outperform during months when quarterly/annual results are announced.

The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.
-- T.T. Munger

RBC is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in RBC's volatility from 2 Oct, 2018 to 29 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 RBC has significant positive skewness in it's return distribution. This indicates that investors can expect RBC to recover from drawdowns quickly. Which makes RBC 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 RBC. Therefore, SP500 must receive a lower allocation than RBC in your portfolio. RBC usually has shorter drawdown period than the SP500 index.

On a general note (since you are interested in RBC), I has performed really well this year and deserves to be closely tracked for investment opportunities.

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