61.75 -3.07 (-4.97%) Sell

Doubt in the minds of IEP investors as it significantly underperforms

13 min read

ICAHN ENTERPRISES L.P. significantly underperformed today. It fell by -4.97% to close at 61.75. During the last week it fell by -4.79% and saw a maximum drawdown of -6.85% before bouncing back.

[Themes containing IEP]

IEP is currently in a bearish trend. Over the last three months trading short signals has not been a profitable strategy for IEP's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -8.42%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to IEP.


IEP has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 2 Mar, 2016 to 19 Dec, 2017. Over the last 2 years 11 months and 10 days, IEP underperformed the SP500 index on 48% days. Which indicates that on days IEP underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months IEP was mostly loss making and delivered on average -0.11% per day. It's best return during this period (of +4.74%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -7.23%) was on Thursday, 8 Nov, 2018. The longest stort-term trend during this period was 6 losing days, which started on 4 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -7.73% of investor capital.

During the last year IEP had 6 profitable months and 6 loss making months. IEP returned profits in fewer months than SP500 index. IEP significantly outperformed SP500 index in Apr 2018, when it returned +9.96% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. IEP 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 IEP and SP500 index significantly outperform during months when quarterly/annual results are announced.

Many folks think they aren't good at earning money, when what they don't know is how to use it.
-- Frank A. Clark

IEP 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 IEP's volatility from 24 Sep, 2018 to 14 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that IEP has significant positive skewness in it's return distribution. This indicates that investors can expect IEP to recover from drawdowns quickly. Which makes IEP 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 IEP. Therefore, SP500 must receive a lower allocation than IEP in your portfolio. SP500 index usually has shorter drawdown period than IEP.

Based on your interest in IEP you may find it interesting to know that VIPS and OPNT are highly volatile and therefore risky. Investors should consider limiting their exposure to these instruments (because of their volatile nature).

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