Prayers for CSL investors as it destroyed investor wealth

CARLISLE COMPANIES INC significantly underperformed on Wednesday. It delivered -0.24% to close at 99.94. On a day when the overall market breadth was 35%, it closed higher than 13% of the market. In comparison, the benchmark SP500 index closed today at +0.54%.

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Buy-and-Hold investors in CSL experienced a maximum drawdown of -26.87% over the last three months. It delivered -21.77% during this strong bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +17.71%.

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CSL has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 14 Nov, 2016 to 25 Oct, 2018. Over the last 2 years 11 months and 8 days, CSL underperformed the SP500 index on 47% days. Which indicates that on days CSL underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months CSL was mostly loss making and delivered on average -0.37% per day. It's best return during this period (of +3.03%) was on Tuesday, 16 Oct, 2018. While it's worst loss in the same period (of -8.4%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 1 Nov, 2018 and went on till 8 Nov, 2018. This bullish trend returned +5.51% to investors.

The last 12 months saw CSL's investors making profits in 6 months and incurring losses in 6 months. CSL was less consistent in delivering monthly returs than SP500 index. CSL was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -20.21% compared to -7.28% returned by SP500 index in Oct 2018. CSL 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 CSL and SP500 index significantly outperform during months when quarterly/annual results are announced.

Investment philosophy is the clear understanding that by owning shares of stocks he owns businesses, not pieces of paper.
-- Warren Edward Buffett

CSL 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 CSL's volatility from 13 Sep, 2018 to 24 Oct, 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 CSL has significant positive skewness in it's return distribution. This indicates that investors can expect CSL to recover from drawdowns quickly. Which makes CSL 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 CSL. Therefore, SP500 must receive a lower allocation than CSL in your portfolio. SP500 index usually has shorter drawdown period than CSL.

Based on your interest in CSL you may find it interesting to know that DHR and AIT have both performed similar to CSL and can be considered by investors as alternative investment options.