The party never started for AON investors as it delivered massive losses
11 Dec, 201813 min read
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AON PLC ranked among the worst performers on Tuesday. It returned -1.26% to close at 155.75. On a day when the overall market breadth was 35%, it closed higher than 7% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.
Buy-and-Hold investors in AON experienced a maximum drawdown of -7.06% over the last three months. It returned +2.87% during this up trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals. The net profit from Long signals was +2.1%.
AON has been underperforming the SP500 index in recent time, after having outperformed till 19 Nov, 2018. Over the last 2 years 11 months and 7 days, AON outperformed the SP500 index on 57% days.
During the last three months AON was mostly profitable and delivered on average +0.05% per day. It's best return during this period (of +2.52%) was on Thursday, 25 Oct, 2018. While it's worst loss in the same period (of -3.81%) was on Wednesday, 10 Oct, 2018. There was initially a bullish trend during this period which started on 13 Sep, 2018 and went on till 19 Sep, 2018. The bullish trend returned +2.51% to investors. This was followed by a bearish trend that started on 3 Dec, 2018 and ended on 11 Dec, 2018. This bearish trend lost -5.8% of investor capital.
On monthly basis, AON delivered profits in more months over the last year, than losses. AON delivered profits less regularly than SP500 index. AON significantly outperformed SP500 index in Jan 2018, when it returned +8.12% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. AON had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both AON and SP500 index significantly outperform during months when quarterly/annual results are announced.
When you stop chasing the wrong things you give the right things a chance to catch you.
-- Lolly Daskal
AON 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 AON's volatility from 13 Sep, 2018 to 11 Dec, 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 AON has significant positive skewness in it's return distribution. This indicates that investors can expect AON to recover from drawdowns quickly. Which makes AON a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
AON has more chance of extreme outcomes than the SP500 index. Therefore, AON must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than AON.
Based on your interest in AON you may find it interesting to know that PRQR has shown remarkable performance this year and deserves to be on every investors' watchlist.
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