LZB investors incur serious losses
14 Dec, 201813 min read
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LA-Z-BOY INC ranked among the worst performers today. It delivered -1.98% to close at 25.73. During the last week it delivered -3.71% and saw a maximum drawdown of -4.35% before bouncing back.
Buy-and-Hold investors in LZB experienced a maximum drawdown of -20.09% over the last three months. It delivered -19.59% 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 +6.66%.
LZB has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 8 Dec, 2016 to 30 Aug, 2017. Over the last 2 years 11 months and 10 days, LZB underperformed the SP500 index on 48% days. Which indicates that on days LZB underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
LZB returned losses on 61% days in the last three months. During this time, it delivered on average -0.33% per day. It delivered it's worst daily return of -6.83%, during this period, on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 8 losing days, which started on 4 Oct, 2018 and ended on 15 Oct, 2018. This bearish trend lost -10.75% of investor capital.
The last 12 months saw LZB's investors making profits in 4 months and incurring losses in 8 months. LZB was less consistent in delivering monthly returs than SP500 index. LZB was also a more risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -11.97% compared to -7.28% returned by SP500 index in Oct 2018. LZB and SP500 index, both had periods of 2 consecutive losing months.
Buy when everyone else is selling and hold until everyone else is buying. That's not just a catchy slogan. It's the very essence of successful investing.
-- J. Paul Getty
LZB 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 LZB's volatility from 28 Sep, 2018 to 4 Dec, 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 LZB has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.
SP500 index has more chance of extreme outcomes than LZB. Therefore, SP500 must receive a lower allocation than LZB in your portfolio. SP500 index usually has shorter drawdown period than LZB.
Based on your interest in LZB you may find it interesting to know that OPNT, IMTE and GNK are all extremely risky investment candidates that must be evaluated carefully. Investors with low risk profile are better off avoiding them till their performance becomes more consistent.
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