83.58 -1.33 (-1.59%) Sell

Don't buy ABBV now, it is a volatile investment

13 min read

ABBVIE INC. has destroyed investor wealth on Tuesday. It fell by -1.59% to close at 83.58. On a day when the overall market breadth was 34%, it closed higher than 8% of the market. In comparison, the benchmark SP500 index closed today at +0.01%.

[Themes containing ABBV]

ABBV showed a bearish trend over the last 3 months. During this period ABBV fell by -8.17% and saw a maximum drawdown of -18.91%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in ABBV till volatility reduces and a clear trend emerges.


ABBV has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 22 Feb, 2017 to 26 Feb, 2018. Over the last 2 years 11 months and 14 days, ABBV outperformed the SP500 index on 54% days.

ABBV was profitable on 52% days in the last three months. During this time, it delivered on average -0.11% per day. It delivered it's best daily return of +4.85%, during this period, on Friday, 30 Nov, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 5 Nov, 2018 and went on till 12 Nov, 2018. This bullish trend returned +12.16% to investors.

During the last year ABBV had 6 profitable months and 6 loss making months. ABBV returned profits in fewer months than SP500 index. ABBV significantly outperformed SP500 index in Nov 2018, when it returned +21.09% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. ABBV had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year. It is interesting to note that both ABBV and SP500 index significantly outperform during months when quarterly/annual results are announced.

How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.
-- Robert G. Allen

ABBV 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 ABBV's volatility from 1 Oct, 2018 to 5 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

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

Investors trading in ABBV derivatives at this moment can consider 'Married Call' options strategy to receive better risk-adjusted returns.

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

Based on your interest in ABBV you may find it interesting to know that EW and SQ are both mid caps that have shown remarkable performance and deserve to be on every investors' watchlist.

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