10.02 +0.45 (+4.48%) Buy

Waiting to invest in LTM? Consider at the moment as it outperformed

13 min read

LTM outperformed today. On a longer term basis, investors in LATAM AIRLINES GROUP S.A. (Foreign) made -0.03% per day. Tuesday's performance of +4.48% was a outperformance compared to it's daily average.

[Themes containing LTM]

LTM showed a strong bullish trend over the last 3 months. During this period LTM surged by +15.97% and saw a maximum drawdown of -14.75%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in LTM till volatility reduces and a clear trend emerges.


LTM has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 19 Jan, 2016 to 1 Feb, 2018. Over the last 2 years 11 months and 7 days, LTM outperformed the SP500 index on 50% days. Which indicates that on days LTM outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.

LTM returned losses on 53% days in the last three months. During this time, it delivered on average +0.28% per day. It delivered it's worst daily return of -7.3%, during this period, on Monday, 29 Oct, 2018. The longest stort-term trend during this period was 5 losing days, which started on 9 Oct, 2018 and ended on 15 Oct, 2018. This bearish trend lost -9.22% of investor capital.

The last 12 months saw LTM's investors making profits in 6 months and incurring losses in 6 months. LTM was less consistent in delivering monthly returs than SP500 index. LTM was also a more risky investment than SP500 index as it's worst month in the last year, May 2018, returned -21.41% compared to -7.28% returned by SP500 index in Oct 2018. LTM had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both LTM and SP500 index significantly outperform during months when quarterly/annual results are announced.

It's not the employer who pays the wages. Employers only handle the money. It's the customer who pays the wages.
-- Henry Ford

LTM 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 LTM's volatility from 12 Sep, 2018 to 1 Nov, 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 LTM has significant negative skewness in it's return distribution. This indicates that LTM is very risky for short-term investment and can significantly underperform for long durations.

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

On a general note (since you are interested in LTM), three instruments that are extremely volatile are IX, OPNT and VIPS. They must all be evaluated prudently and investors are better off avoiding them at the moment.

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