Waiting to invest in MCK? Avoid at the moment as it has destroyed investor wealth

MCK has destroyed investor wealth today. On a longer term basis, investors in MCKESSON CORP made -0.0% per day. Monday's performance of -4.08% was a underperformance compared to it's daily average.

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MCK showed a strong bearish trend over the last 3 months. During this period MCK delivered -15.92% and saw a maximum drawdown of -18.23%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in MCK till volatility reduces and a clear trend emerges.

Trend

Monthly Performance

Alpha (outperformance)

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Volatility

Return distribution

MCK has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 6 Jan, 2016 to 4 Sep, 2018. Over the last 2 years 11 months and 10 days, MCK underperformed the SP500 index on 51% days.

During the last three months MCK was mostly loss making and delivered on average -0.26% per day. It's best return during this period (of +4.19%) was on Tuesday, 27 Nov, 2018. While it's worst loss in the same period (of -5.05%) was on Friday, 14 Dec, 2018. The longest stort-term trend during this period was 7 losing days, which started on 8 Nov, 2018 and ended on 16 Nov, 2018. This bearish trend lost -6.83% of investor capital.

The last 12 months saw MCK's investors making profits in 4 months and incurring losses in 8 months. MCK was less consistent in delivering monthly returs than SP500 index. MCK significantly outperformed SP500 index in Apr 2018, when it returned +11.73% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. MCK had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from May 2018 to Jul 2018) during which period it delivered -22.04%. It is interesting to note that both MCK and SP500 index significantly outperform during months when quarterly/annual results are announced.

"The financial markets generally are unpredictable. So that one has to have different scenarios... The idea that you can actually predict what's going to happen contradicts my way of looking at the market.

MCK 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 MCK's volatility from 2 Oct, 2018 to 25 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 MCK has significant positive skewness in it's return distribution. This indicates that investors can expect MCK to recover from drawdowns quickly. Which makes MCK a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in MCK derivatives at this moment can consider 'Bull Call Spread' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in MCK), two instruments that have delivered similar performance as MCK are LBC and KALU. They are suitable as good alternative investment candidates that can diversify your portfolio.