MCDONALDS CORP

179.71 -1.07 (-0.6%) Sell

MCD is a falling knife, continues to bleed every investor trying to catch it

13 min read

MCDONALDS CORP has destroyed investor wealth on Tuesday. It delivered -0.6% to close at 179.71. On a day when the overall market breadth was 34%, it closed higher than 10% of the market. In comparison, the benchmark SP500 index closed today at +0.01%.

[Themes containing MCD]

Buy-and-Hold investors in MCD experienced a maximum drawdown of -5.05% over the last three months. It surged by +12.9% during this strong bullish trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals. The net profit from Long signals was +9.37%.

Trend

MCD has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 20 Oct, 2016 to 13 Dec, 2018. Over the last 2 years 11 months and 14 days, MCD outperformed the SP500 index on 51% days.

MCD returned losses on 51% days in the last three months. During this time, it delivered on average +0.2% per day. It delivered it's best daily return of +6.31%, during this period, on Tuesday, 23 Oct, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 2 Nov, 2018 and went on till 9 Nov, 2018. This bullish trend returned +6.18% to investors.

The last 12 months saw MCD's investors making profits in 6 months and incurring losses in 6 months. MCD was less consistent in delivering monthly returs than SP500 index. MCD was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -7.83% compared to -7.75% returned by SP500 index in Dec 2018. MCD had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both MCD and SP500 index significantly outperform during months when quarterly/annual results are announced.

"You have venture capitalists. We view them as experts who also help finance your company and give directions and also some pretty candid discussions about what you have to do better.

MCD 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 MCD's volatility from 20 Sep, 2018 to 30 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that MCD 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.

Investors trading in MCD derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

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

Based on your interest in MCD you may find it interesting to know that PFE, V and CSCO are large caps that have all shown remarkable performance and qualify to be on every investor's watchlist.

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