1078.63 -27.93 (-2.59%) Sell

Want to invest in GOOGL? Avoid as it significantly underperformed

13 min read

ALPHABET INC. significantly underperformed on Tuesday. It returned -2.59% to close at 1078.63. On a day when the overall market breadth was 35%, it closed higher than 6% of the market. In comparison, the benchmark SP500 index closed today at -0.0142%.

[Themes containing GOOGL]

GOOGL showed a down trend over the last 3 months. During this period GOOGL returned -3.25% and saw a maximum drawdown of -11.8%. There was a short signal during this period which returned +3.25%.


GOOGL has been underperforming the SP500 index in recent time, after having outperformed till 26 Jul, 2018. Over the last 3 years and 1 month, GOOGL outperformed the SP500 index on 54% days.

GOOGL returned losses on 55% days in the last three months. During this time, it delivered on average -0.03% per day. It delivered it's best daily return of +6.42%, during this period, on Wednesday, 26 Dec, 2018. There was initially a bearish trend during this period which started on 8 Nov, 2018 and went on till 13 Nov, 2018. The trend delivered -5.54% losses to investors. This was followed by a bullish trend that started on 28 Nov, 2018 and ended on 3 Dec, 2018. This bullish trend delivered +5.99% to investors.

On monthly basis, GOOGL delivered profits in more months over the last year, than losses. GOOGL delivered profits less regularly than SP500 index. GOOGL was also a less risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -9.76% compared to -9.94% returned by SP500 index in Dec 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 less 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 29 Oct, 2018 to 18 Jan, 2019. While there was a significant surge in the SP500 index's volatility from 27 Nov, 2018 to 27 Dec, 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 'Long Strangle' 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 AYTU and DOGZ have both shown remarkable performance and deserve to be on every investors' watchlist.

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