139.71 -1.13 (-0.81%) Sell

Doubt in the minds of LH investors as it delivered massive losses

13 min read

LABORATORY CORP OF AMERICA HOLDINGS ranked among the worst performers on Thursday. It fell by -0.81% to close at 139.71. It is currently trading -26% below it's 52 week high of 189.41.

[Themes containing LH]

Buy-and-Hold investors in LH experienced a maximum drawdown of -19.84% over the last three months. It fell by -19.23% during this strong bearish 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 +16.72%.


LH has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 25 Jun, 2018 to 30 Nov, 2018. Over the last 2 years 11 months and 9 days, LH underperformed the SP500 index on 45% days. Which indicates that on days LH underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months LH was mostly loss making and delivered on average -0.32% per day. It's best return during this period (of +3.8%) was on Wednesday, 7 Nov, 2018. While it's worst loss in the same period (of -9.99%) was on Friday, 30 Nov, 2018. The longest stort-term trend during this period was 5 losing days, which started on 1 Oct, 2018 and ended on 5 Oct, 2018. This bearish trend lost -2.66% of investor capital.

During the last year LH had 4 profitable months and 8 loss making months. LH returned profits in fewer months than SP500 index. LH was also a more risky investment than SP500 index as it's worst month in the last year, Nov 2018, returned -9.29% compared to -7.28% returned by SP500 index in Oct 2018. LH had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Jun 2018 to Aug 2018) during which period it delivered -5.01%. It is interesting to note that both LH and SP500 index significantly outperform during months when quarterly/annual results are announced.

Happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.
-- Franklin D. Roosevelt

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

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

On a general note (since you are interested in LH), two mid cap instruments that deserve special mention are TWTR and ABMD. They have significantly outperformed the overall market.

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