Prayers for BSX investors as it destroyed investor wealth
13 Dec, 201813 min read
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BOSTON SCIENTIFIC CORP was among the worst performers on Thursday. It delivered -0.32% to close at 36.98. On a day when the overall market breadth was 35%, it closed higher than 3% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.
Buy-and-Hold investors in BSX experienced a maximum drawdown of -12.78% over the last three months. It delivered -1.1% during this bearish trending period. There were both Long and Short signals during this period, while the long signals were marginally more profitable than the short signals.
BSX has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 7 Mar, 2016 to 9 Nov, 2018. Over the last 2 years 11 months and 9 days, BSX outperformed the SP500 index on 54% days.
During the last three months BSX was mostly profitable and delivered on average 0.0% per day. It's best return during this period (of +4.61%) was on Tuesday, 16 Oct, 2018. While it's worst loss in the same period (of -5.17%) was on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 8 profitable days, which started on 21 Nov, 2018 and went on till 3 Dec, 2018. This bullish trend returned +12.44% to investors.
The last 12 months saw BSX's investors making profits in 9 months and incurring losses in 3 months. During the last year, BSX delivered profits in more months than SP500 index. BSX significantly outperformed SP500 index in Jan 2018, when it returned +10.6% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. BSX had a longer winning streak of profitable months than SP500 index. It went up in 7 straight months (from Mar 2018 to Sep 2018) during which period it delivered +37.08%.
Wealth is the ability to fully experience life.
-- Henry David Thoreau
BSX 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 BSX's volatility from 14 Sep, 2018 to 20 Nov, 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 BSX has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.
Investors trading in BSX derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than BSX. Therefore, SP500 must receive a lower allocation than BSX in your portfolio. SP500 index usually has shorter drawdown period than BSX.
On a general note (since you are interested in BSX), three instruments that deserve special mention are NIHD, DFBG and NFEC. They have all outperformed the market and must be closely watched for investment opportunities.
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