13.36 -0.56 (-4.16%) Sell

Doubt in the minds of STM investors as it ranked among the worst performers

13 min read

STMICROELECTRONICS NV (Foreign) delivered massive losses on Friday. It fell by -4.16% to close at 13.36. On a day when the overall market breadth was 35%, it closed higher than 78% of the market. In comparison, the benchmark SP500 index closed today at -0.0233%.

[Themes containing STM]

STM is currently in a bearish trend. The current bearish signal has generated a profit of +28.82% for investors in the last three months.


STM has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 6 Apr, 2016 to 14 Jun, 2018. Over the last 2 years 11 months and 3 days, STM outperformed the SP500 index on 55% days.

During the last three months STM was mostly loss making and delivered on average -0.48% per day. It's best return during this period (of +5.39%) was on Monday, 3 Dec, 2018. While it's worst loss in the same period (of -13.79%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 5 losing days, which started on 4 Oct, 2018 and ended on 10 Oct, 2018. This bearish trend lost -15.08% of investor capital.

During the last year STM had 3 profitable months and 9 loss making months. STM returned profits in fewer months than SP500 index. STM was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -16.68% compared to -7.28% returned by SP500 index in Oct 2018. STM had a longer winning streak of losing months than SP500 index. It went down in 7 straight months (from Jun 2018 to Dec 2018) during which period it delivered -54.38%. It is interesting to note that both STM and SP500 index significantly outperform during months when quarterly/annual results are announced.

"Based on my own personal experience - both as an investor in recent years and an expert witness in years past - rarely do more than three or four variables really count. Everything else is noise.

STM 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 STM's volatility from 24 Sep, 2018 to 29 Oct, 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 STM has significant positive skewness in it's return distribution. This indicates that investors can expect STM to recover from drawdowns quickly. Which makes STM 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 STM. Therefore, SP500 must receive a lower allocation than STM in your portfolio. SP500 index usually has shorter drawdown period than STM.

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

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