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

SCHW is a falling knife that can bleed you if you catch it today. On a longer term basis, investors in SCHWAB CHARLES CORP made -0.07% per day. Thursday's performance of -1.07% was a significant underperformance compared to it's daily average.

[Themes containing SCHW]

Buy-and-Hold investors in SCHW experienced a maximum drawdown of -21.22% over the last three months. It returned -19.02% 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 +5.79%.

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SCHW has been underperforming the SP500 index in recent time, after having outperformed till 22 May, 2018. Over the last 2 years 11 months and 9 days, SCHW underperformed the SP500 index on 48% days. Which indicates that on days SCHW underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

SCHW was profitable on 53% days in the last three months. During this time, it delivered on average -0.32% per day. It delivered it's worst daily return of -5.39%, during this period, on Tuesday, 4 Dec, 2018. There was initially a bullish trend during this period which started on 25 Oct, 2018 and went on till 8 Nov, 2018. The bullish trend returned +13.45% to investors. This was followed by a bearish trend that started on 4 Dec, 2018 and ended on 10 Dec, 2018. This bearish trend lost -9.88% of investor capital.

On monthly basis, SCHW delivered losses in more months over the last year, than profits. SCHW delivered profits less regularly than SP500 index. SCHW significantly outperformed SP500 index in Apr 2018, when it returned +10.45% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. SCHW had a longer winning streak of losing months than SP500 index. It went down in 8 straight months (from May 2018 to Dec 2018) during which period it delivered -29.78%. It is interesting to note that both SCHW and SP500 index significantly outperform during months when quarterly/annual results are announced.

Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception.
-- George Soros

SCHW 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 SCHW's volatility from 25 Sep, 2018 to 7 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that SCHW has significant positive skewness in it's return distribution. This indicates that investors can expect SCHW to recover from drawdowns quickly. Which makes SCHW a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in SCHW derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

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

Based on your interest in SCHW you may find it interesting to know that CSCO is a large cap that has shown remarkable performance and deserves to be on every investors' watchlist.