LNT investors herd to book profits while the going is good
14 Dec, 201813 min read
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ALLIANT ENERGY CORP delivered massive losses on Friday. It fell by -1.73% to close at 45.32. It is currently trading +22% above it's 52 week low of 37.14 and is down only -2% from it's 52 week high.
LNT showed a bullish trend over the last 3 months. During this period LNT surged by +3.02% and saw a maximum drawdown of -5.02%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in LNT till volatility reduces and a clear trend emerges.
LNT has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 27 Jun, 2016 to 11 Jun, 2018. Over the last 2 years 11 months and 10 days, LNT outperformed the SP500 index on 53% days.
LNT was profitable on 50% days in the last three months. During this time, it delivered on average +0.05% per day. It delivered it's worst daily return of -2.94%, during this period, on Thursday, 11 Oct, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 5 Nov, 2018 and went on till 12 Nov, 2018. This bullish trend returned +6.24% to investors.
During the last year LNT had 6 profitable months and 6 loss making months. LNT returned profits in fewer months than SP500 index. LNT significantly outperformed SP500 index in Mar 2018, when it returned +5.72% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. LNT had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year. It is interesting to note that both LNT and SP500 index significantly outperform during months when quarterly/annual results are announced.
I will never be in the stock market. It's just gambling. I'm a gambler, but I'll gamble on the practicality of things.
-- Jeremy Renner
LNT is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in LNT's volatility from 17 Sep, 2018 to 11 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 LNT has significant positive skewness in it's return distribution. This indicates that investors can expect LNT to recover from drawdowns quickly. Which makes LNT a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
LNT has more chance of extreme outcomes than the SP500 index. Therefore, LNT must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than LNT.
Based on your interest in LNT you may find it interesting to know that ATO and PNW have both performed similar to LNT and can be considered by investors as alternative investment options.
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