MEDTRONIC PLC

93.72 -1.75 (-1.86%) Buy

Don't consider investing in MDT now, it is risky at the moment

13 min read

MDT was among the worst performers today. On a longer term basis, investors in MEDTRONIC PLC made -0.05% per day. Friday's performance of -1.86% was a significant underperformance compared to it's daily average.

[Themes containing MDT]

MDT showed a down trend over the last 3 months. During this period MDT returned -2.41% and saw a maximum drawdown of -10.09%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in MDT till volatility reduces and a clear trend emerges.

Trend

MDT has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, MDT underperformed the SP500 index on 46% days. Which indicates that on days MDT underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months MDT delivered profits on 52% days. However, it still managed to end this period in a loss. It's best return during this period (of +2.91%) was on Tuesday, 16 Oct, 2018. While it's worst loss in the same period (of -3.55%) was on Monday, 19 Nov, 2018. There was initially a bearish trend during this period which started on 18 Oct, 2018 and went on till 24 Oct, 2018. The trend delivered -6.12% losses to investors. This was followed by a bullish trend that started on 26 Nov, 2018 and ended on 3 Dec, 2018. This bullish trend delivered +7.12% to investors.

On monthly basis, MDT delivered profits in more months over the last year, than losses. MDT delivered profits less regularly than SP500 index. MDT was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -9.72% compared to -7.28% returned by SP500 index in Oct 2018. MDT 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 MDT and SP500 index significantly outperform during months when quarterly/annual results are announced.

Empty pockets never held anyone back. Only empty heads and empty hearts can do that.
-- Norman Vincent Peale

MDT is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in MDT's volatility from 25 Sep, 2018 to 20 Nov, 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 MDT has significant positive skewness in it's return distribution. This indicates that investors can expect MDT to recover from drawdowns quickly. Which makes MDT a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

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

On a general note (since you are interested in MDT), ZBRA is a small cap that deserves to be closely tracked for investment opportunities.

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