28.35 -1.22 (-4.29%) Sell

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

13 min read

TEX was among the worst performers today. On a longer term basis, investors in TEREX CORP made +0.03% per day. Friday's performance of -4.29% was a significant underperformance compared to it's daily average.

[Themes containing TEX]

TEX showed a strong down trend over the last 3 months. During this period TEX lost -24.86% and saw a maximum drawdown of -33.26%. There were 2 short signals during this period that returned a cumulative of +14.22% to investors.


TEX has been underperforming the SP500 index in recent time, after having outperformed till 19 Jan, 2018. Over the last 2 years 11 months and 3 days, TEX outperformed the SP500 index on 53% days.

During the last three months TEX was mostly loss making and delivered on average -0.4% per day. It's best return during this period (of +7.82%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -13.39%) was on Friday, 2 Nov, 2018. There was initially a bullish trend during this period which started on 12 Sep, 2018 and went on till 20 Sep, 2018. The bullish trend returned +12.19% to investors. This was followed by a bearish trend that started on 17 Oct, 2018 and ended on 24 Oct, 2018. This bearish trend lost -20.49% of investor capital.

TEX had 5 profitable and 7 loss making months over the last year. During the last year, TEX underperformed SP500 index on monthly return basis. TEX was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -16.5% compared to -7.28% returned by SP500 index in Oct 2018. TEX had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year. It is interesting to note that both TEX and SP500 index significantly outperform during months when quarterly/annual results are announced.

The stock market clearly values companies that can deliver disruptive innovation.
-- Steve Blank

TEX 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 TEX's volatility from 10 Sep, 2018 to 2 Nov, 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 TEX 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 TEX. Therefore, SP500 must receive a lower allocation than TEX in your portfolio. SP500 index usually has shorter drawdown period than TEX.

On a general note (since you are interested in TEX), three instruments that have performed similar to TEX are RAND, S and JAG. They must all be evaluated as alternative investment options and for diversification.

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