1179.56 +7.49 (+0.63%) Sell

GOOGL investors hold onto their investments as it marginally outperforms

13 min read

ALPHABET INC. was among the best performers on Monday. It returned +0.63% to close at 1179.56. On a day when the overall market breadth was 43%, it closed higher than 79% of the market. In comparison, the benchmark SP500 index closed today at -0.0035%.

Buy-and-Hold investors in GOOGL experienced a maximum drawdown of -9.78% over the last three months. It returned +3.54% 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 +1.8%.


GOOGL has been underperforming the SP500 index in recent time, after having outperformed till 26 Jul, 2018. Over the last 2 years and 9 months, GOOGL outperformed the SP500 index on 55% days.

During the last three months GOOGL delivered losses on 52% days. However, it still managed to end this period in a profit. It's best return during this period (of +3.89%) was on Tuesday, 24 Jul, 2018. While it's worst loss in the same period (of -2.54%) was on Friday, 27 Jul, 2018. There was initially a bullish trend during this period which started on 23 Jul, 2018 and went on till 26 Jul, 2018. The bullish trend returned +7.15% to investors. This was followed by a bearish trend that started on 30 Aug, 2018 and ended on 10 Sep, 2018. This bearish trend lost -7.29% of investor capital.

GOOGL had 9 profitable and 3 loss making months over the last year. During the last year, GOOGL underperformed SP500 index on monthly return basis. GOOGL significantly outperformed SP500 index in Jan 2018, when it returned +10.16% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. GOOGL 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 GOOGL and SP500 index significantly outperform during months when quarterly/annual results are announced.

"Cash combined with courage in a time of crisis is priceless.

GOOGL is becoming more volatile overall. In comparison, the SP500 index is seeing a fall in volatility. During the last three months, there was a significant fall in GOOGL's volatility from 25 Jun, 2018 to 29 Aug, 2018. While there was a significant fall in the SP500 index's volatility from 25 Jun, 2018 to 28 Aug, 2018.

Advanced/professional short-term investors should note that GOOGL 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 GOOGL 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 GOOGL. Therefore, SP500 must receive a lower allocation than GOOGL in your portfolio. SP500 index usually has shorter drawdown period than GOOGL.

Based on your interest in GOOGL you may find it interesting to know that PF, OLBK and CME have all performed similar to GOOGL and qualify as alternative investment candidates that must be evaluated for diversification.

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