89.08 +0.04 (+0.04%) Sell

Don't go profit booking on ALB now, it delivered a decent return

13 min read

ALBEMARLE CORP managed to outperform the broader market on Tuesday. It surged by +0.04% to close at 89.08. On a day when the overall market breadth was 35%, it closed higher than 11% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.

[Themes containing ALB]

ALB showed a strong bearish trend over the last 3 months. During this period ALB fell by -10.44% and saw a maximum drawdown of -17.91%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in ALB till volatility reduces and a clear trend emerges.


ALB has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 11 Jan, 2016 to 8 Nov, 2017. Over the last 2 years 11 months and 7 days, ALB outperformed the SP500 index on 54% days.

ALB returned losses on 54% days in the last three months. During this time, it delivered on average -0.16% per day. It delivered it's best daily return of +6.25%, during this period, on Thursday, 1 Nov, 2018. The longest stort-term trend during this period was 7 profitable days, which started on 12 Sep, 2018 and went on till 20 Sep, 2018. This bullish trend returned +7.0% to investors.

During the last year ALB had 5 profitable months and 7 loss making months. ALB returned profits in fewer months than SP500 index. ALB was also a more risky investment than SP500 index as it's worst month in the last year, Jan 2018, returned -15.16% compared to -7.28% returned by SP500 index in Oct 2018. ALB 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 ALB and SP500 index significantly outperform during months when quarterly/annual results are announced.

"All intelligent investing is value investing - acquiring more that you are paying for. You must value the business in order to value the stock.

ALB is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in ALB's volatility from 2 Oct, 2018 to 7 Dec, 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 ALB has significant positive skewness in it's return distribution. This indicates that investors can expect ALB to recover from drawdowns quickly. Which makes ALB 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 ALB. Therefore, SP500 must receive a lower allocation than ALB in your portfolio. ALB usually has shorter drawdown period than the SP500 index.

On a general note (since you are interested in ALB), MSFT is a large cap that deserves to be closely tracked for investment opportunities.

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