34.26 -0.18 (-0.52%) Sell

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

13 min read

SILICON MOTION TECHNOLOGY CORP (Foreign) is a falling knife that can bleed you if you catch it on Tuesday. It fell by -0.52% to close at 34.26. It is currently trading -43% below it's 52 week high of 60.23.

[Themes containing SIMO]

Buy-and-Hold investors in SIMO experienced a maximum drawdown of -40.74% over the last three months. It fell by -36.45% during this strong bearish trending period. There were no long signals during this period, where the short signal generated good profits of +36.45% for investors.


SIMO has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 19 Jul, 2016 to 20 Nov, 2018. Over the last 2 years 11 months and 7 days, SIMO underperformed the SP500 index on 50% days. Which indicates that on days SIMO underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

SIMO returned losses on 67% days in the last three months. During this time, it delivered on average -0.67% per day. It delivered it's best daily return of +11.55%, during this period, on Wednesday, 21 Nov, 2018. The longest stort-term trend during this period was 9 losing days, which started on 2 Oct, 2018 and ended on 12 Oct, 2018. This bearish trend lost -17.21% of investor capital.

During the last year SIMO had 5 profitable months and 7 loss making months. SIMO returned profits in fewer months than SP500 index. SIMO was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -30.26% compared to -7.28% returned by SP500 index in Oct 2018. SIMO had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.

Finance is not merely about making money. It's about achieving our deep goals and protecting the fruits of our labor. It's about stewardship and, therefore, about achieving the good society.
-- Robert J. Shiller

SIMO is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in SIMO's volatility from 12 Sep, 2018 to 31 Oct, 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 SIMO 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 SIMO. Therefore, SP500 must receive a lower allocation than SIMO in your portfolio. SP500 index usually has shorter drawdown period than SIMO.

On a general note (since you are interested in SIMO), three mid cap instruments that deserve special mention are LULU, SQ and ABMD. They have all outperformed the market and must be closely watched for investment opportunities.

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