RESOLUTE FOREST PRODUCTS INC.

8.38 -0.32 (-3.79%) Sell

Want to invest in RFP? Avoid as it is a falling knife that can bleed you if you catch it

13 min read

RESOLUTE FOREST PRODUCTS INC. is a falling knife that can bleed you if you catch it today. It returned -3.79% to close at 8.38. It's recent 5 day performance has been -2.57%, -3.04%, +0.88%, -0.54% and -2.85%.

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RFP showed a strong down trend over the last 3 months. During this period RFP returned -42.6% and saw a maximum drawdown of -42.6%. There were 2 short signals during this period that returned a cumulative of +28.18% to investors.

Trend

RFP has been underperforming the SP500 index in recent time, after having outperformed till 13 Sep, 2018. Over the last 2 years 11 months and 10 days, RFP underperformed the SP500 index on 48% days. Which indicates that on days RFP underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months RFP was mostly loss making and delivered on average -0.8% per day. It's best return during this period (of +21.21%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -12.17%) was on Thursday, 6 Dec, 2018. There was initially a bullish trend during this period which started on 26 Nov, 2018 and went on till 29 Nov, 2018. The bullish trend returned +6.53% to investors. This was followed by a bearish trend that started on 4 Dec, 2018 and ended on 11 Dec, 2018. This bearish trend lost -20.64% of investor capital.

On monthly basis, RFP delivered losses in more months over the last year, than profits. RFP delivered profits less regularly than SP500 index. RFP significantly outperformed SP500 index in Aug 2018, when it returned +35.47% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. RFP had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Sep 2018 to Dec 2018) during which period it delivered -41.65%. It is interesting to note that both RFP and SP500 index significantly outperform during months when quarterly/annual results are announced.

"The monarchy is foremost a business, and it's important to them that the British public continue to finance the excessive luxurious lifestyles of the now quite enormous, wasteful and useless 'royal' family. I find it very sad.

RFP 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 fall in RFP's volatility from 3 Oct, 2018 to 19 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 RFP 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 RFP. Therefore, SP500 must receive a lower allocation than RFP in your portfolio. SP500 index usually has shorter drawdown period than RFP.

Based on your interest in RFP you may find it interesting to know that IX, NVCN and IMTE are all extremely risky investment candidates that must be evaluated carefully. Investors with low risk profile are better off avoiding them till their performance becomes more consistent.

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