Brics Market THEME

1398.65 +47.57 (+3.4%) Sell

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

14 min read

Brics Market has destroyed investor wealth on Wednesday. It gained +3.4% to close at 1398.65. It is currently trading -27% below it's 52 week high of 1932.58.

[Theme constituents]

~BRICSMKT is currently in a down trend. Over the last three months Buy-and-Hold has been a better strategy (returning +3.0%) for ~BRICSMKT's investors than shorting it.


~BRICSMKT has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 8 days, ~BRICSMKT outperformed the SP500 index on 53% days.

~BRICSMKT returned losses on 53% days in the last three months. During this time, it delivered on average +0.06% per day. It delivered it's best daily return of +4.54%, during this period, on Thursday, 1 Nov, 2018. There was initially a bullish trend during this period which started on 18 Sep, 2018 and went on till 21 Sep, 2018. The bullish trend returned +4.66% 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 -4.79% of investor capital.

~BRICSMKT had 3 profitable and 9 loss making months over the last year. During the last year, ~BRICSMKT underperformed SP500 index on monthly return basis. ~BRICSMKT was also a more risky investment than SP500 index as it's worst month in the last year, Aug 2018, returned -9.0% compared to -7.28% returned by SP500 index in Oct 2018. ~BRICSMKT had a longer winning streak of losing months than SP500 index. It went down in 9 straight months (from Feb 2018 to Oct 2018) during which period it delivered -31.34%. It is interesting to note that both ~BRICSMKT and SP500 index significantly outperform during months when quarterly/annual results are announced.

Empty pockets never held anyone back. Only empty heads and empty hearts can do that.
-- Norman Vincent Peale

~BRICSMKT 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 surge in ~BRICSMKT's volatility from 18 Sep, 2018 to 1 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

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

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

On a general note (since you are interested in ~BRICSMKT), two instruments that have delivered similar performance as ~BRICSMKT are GLRE and DX. They are suitable as good alternative investment candidates that can diversify your portfolio.

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