44.86 -0.28 (-0.62%) Sell

The party never started for L investors as it significantly underperforms

13 min read

LOEWS CORP is a falling knife that can bleed you if you catch it on Tuesday. It returned -0.62% to close at 44.86. On a day when the overall market breadth was 35%, it closed higher than 15% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.

[Themes containing L]

Buy-and-Hold investors in L experienced a maximum drawdown of -14.05% over the last three months. It returned -10.94% during this strong down 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 +6.17%.


L has been underperforming the SP500 index in recent time, after having outperformed till 21 Dec, 2016. Over the last 2 years 11 months and 7 days, L underperformed the SP500 index on 46% days. Which indicates that on days L underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

L returned losses on 55% days in the last three months. During this time, it delivered on average -0.17% per day. It delivered it's best daily return of +5.42%, during this period, on Monday, 5 Nov, 2018. There was initially a bearish trend during this period which started on 21 Sep, 2018 and went on till 27 Sep, 2018. The trend delivered -4.33% losses to investors. This was followed by a bullish trend that started on 29 Oct, 2018 and ended on 1 Nov, 2018. This bullish trend delivered +4.27% to investors.

On monthly basis, L delivered losses in more months over the last year, than profits. L delivered profits less regularly than SP500 index. L significantly outperformed SP500 index in Apr 2018, when it returned +7.83% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. L had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Aug 2018 to Oct 2018) during which period it delivered -8.43%. It is interesting to note that both L and SP500 index significantly outperform during months when quarterly/annual results are announced.

Money often costs too much.
-- Ralph Waldo Emerson

L is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in L's volatility from 17 Sep, 2018 to 5 Nov, 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 L has significant positive skewness in it's return distribution. This indicates that investors can expect L to recover from drawdowns quickly. Which makes L a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

L has more chance of extreme outcomes than the SP500 index. Therefore, L must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than L.

Based on your interest in L you may find it interesting to know that I has shown remarkable performance this year and deserves to be on every investors' watchlist.

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