AXP investors herd to book profits while the going is good

AMERICAN EXPRESS CO has destroyed investor wealth on Tuesday. It returned -0.16% to close at 101.02. It is currently trading +14% above it's 52 week low of 88.34 and is down only -10% from it's 52 week high.

[Themes containing AXP]

AXP showed a down trend over the last 3 months. During this period AXP returned -8.25% and saw a maximum drawdown of -10.51%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in AXP till volatility reduces and a clear trend emerges.

Trend

Monthly Performance

Alpha (outperformance)

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Volatility

Return distribution

AXP has been underperforming the SP500 index in recent time, after having outperformed till 28 Nov, 2018. Over the last 2 years 11 months and 14 days, AXP outperformed the SP500 index on 53% days.

During the last three months AXP was mostly loss making and delivered on average -0.12% per day. It's best return during this period (of +3.78%) was on Friday, 19 Oct, 2018. While it's worst loss in the same period (of -4.28%) was on Monday, 17 Dec, 2018. There was initially a bullish trend during this period which started on 1 Oct, 2018 and went on till 3 Oct, 2018. The bullish trend returned +1.83% to investors. This was followed by a bearish trend that started on 4 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -6.47% of investor capital.

On monthly basis, AXP delivered profits and losses in equal number of months. AXP delivered profits less regularly than SP500 index. AXP was also a more risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -10.02% compared to -7.75% returned by SP500 index in Dec 2018. AXP had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both AXP and SP500 index significantly outperform during months when quarterly/annual results are announced.

Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years.
-- Warren Buffett

AXP 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 AXP's volatility from 19 Sep, 2018 to 11 Dec, 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 AXP has significant positive skewness in it's return distribution. This indicates that investors can expect AXP to recover from drawdowns quickly. Which makes AXP a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

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

On a general note (since you are interested in AXP), three small cap instruments that deserve special mention are ZBRA, KEYS and AAXN. They have all outperformed the market and must be closely watched for investment opportunities.