Waiting to invest in LPL? Avoid at the moment as it is a falling knife that can bleed you if you catch it
07 Dec, 201813 min read
Share with friends 
LG DISPLAY CO., LTD. (Foreign) is a falling knife that can bleed you if you catch it on Friday. It delivered -2.09% to close at 7.48. It is currently trading -52% below it's 52 week high of 15.65.
LPL showed a strong bearish trend over the last 3 months. During this period LPL delivered -20.09% and saw a maximum drawdown of -27.03%. There were 3 short signals during this period that returned a cumulative of +15.57% to investors.
LPL has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 5 Jul, 2017 to 8 Nov, 2018. Over the last 2 years 11 months and 3 days, LPL underperformed the SP500 index on 50% days. Which indicates that on days LPL underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
LPL returned losses on 58% days in the last three months. During this time, it delivered on average -0.31% per day. It delivered it's worst daily return of -9.46%, during this period, on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 10 losing days, which started on 28 Sep, 2018 and ended on 11 Oct, 2018. This bearish trend lost -13.66% of investor capital.
The last 12 months saw LPL's investors making profits in 4 months and incurring losses in 8 months. LPL was less consistent in delivering monthly returs than SP500 index. LPL was also a more risky investment than SP500 index as it's worst month in the last year, Jun 2018, returned -19.77% compared to -7.28% returned by SP500 index in Oct 2018. LPL had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Feb 2018 to Jun 2018) during which period it delivered -53.36%. It is interesting to note that both LPL and SP500 index significantly outperform during months when quarterly/annual results are announced.
Invest like a bull, sit like a bear and watch like an eagle. (mantra for long term investing)
-- Vijay Kedia
LPL 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 LPL's volatility from 10 Sep, 2018 to 29 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that LPL has significant negative skewness in it's return distribution. This indicates that LPL is very risky for short-term investment and can significantly underperform for long durations.
LPL has more chance of extreme outcomes than the SP500 index. Therefore, LPL must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than LPL.
Based on your interest in LPL you may find it interesting to know that AAXN and HQY are both small caps that have shown remarkable performance and deserve to be on every investors' watchlist.
... we have a small favour to ask. Help us bring the power of algorithmic trading strategies to individual investors.
All content in this article was automatically generated by algorithms. This ensures that there are no human biases in the analysis provided. This approach to investing is not new and has been around for more than three decades. Yet, it has been available to only the most affluent or elite investors leaving individual investors to trade on emotions (such as fear and greed), intuition and poor analysis from third-parties. We want to change this.
We want to empower investors with all the tools and analysis required by them to make a rational investment decision.
If you found Spotalpha useful, consider making a contribution. For as little as $5 you can support our efforts and it takes less than a minute. Thank you. Contribute