LEA investors hurt by serious losses
14 Dec, 201813 min read
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LEAR CORP has destroyed investor wealth today. It fell by -1.28% to close at 122.47. During the last week it fell by -1.21% and saw a maximum drawdown of -2.24% before bouncing back.
LEA is currently in a bearish trend. The current bearish signal has generated a profit of +22.04% for investors in the last three months.
LEA has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 17 May, 2018 to 13 Dec, 2018. Over the last 2 years 11 months and 10 days, LEA underperformed the SP500 index on 44% days. Which indicates that on days LEA underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months LEA was mostly loss making and delivered on average -0.37% per day. It's best return during this period (of +4.33%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -5.55%) was on Tuesday, 25 Sep, 2018. The longest stort-term trend during this period was 5 losing days, which started on 4 Dec, 2018 and ended on 11 Dec, 2018. This bearish trend lost -12.54% of investor capital.
During the last year LEA had 4 profitable months and 8 loss making months. LEA returned profits in fewer months than SP500 index. LEA was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -10.73% compared to -7.28% returned by SP500 index in Oct 2018. LEA had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Jun 2018 to Oct 2018) during which period it delivered -41.47%. It is interesting to note that both LEA and SP500 index significantly outperform during months when quarterly/annual results are announced.
Money often costs too much.
-- Ralph Waldo Emerson
LEA 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 LEA's volatility from 19 Sep, 2018 to 29 Oct, 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 LEA has significant positive skewness in it's return distribution. This indicates that investors can expect LEA to recover from drawdowns quickly. Which makes LEA a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
LEA has more chance of extreme outcomes than the SP500 index. Therefore, LEA must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than LEA.
Based on your interest in LEA you may find it interesting to know that TWTR is a mid cap that has shown remarkable performance and deserves to be on every investors' watchlist.
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