MKTX investors herd to book profits while the going is good

MKTX has destroyed investor wealth today. On a longer term basis, investors in MARKETAXESS HOLDINGS INC made -0.1% per day. Wednesday's performance of -0.18% was a significant underperformance compared to it's daily average.

[Themes containing MKTX]

Buy-and-Hold investors in MKTX experienced a maximum drawdown of -5.59% over the last three months. It grew by +24.53% during this strong up 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 +9.26%.

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Monthly Performance

Alpha (outperformance)

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Return distribution

MKTX has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 8 days, MKTX outperformed the SP500 index on 52% days.

During the last three months MKTX was mostly profitable and delivered on average +0.36% per day. It's best return during this period (of +8.33%) was on Wednesday, 24 Oct, 2018. While it's worst loss in the same period (of -3.49%) was on Wednesday, 31 Oct, 2018. There was initially a bearish trend during this period which started on 25 Sep, 2018 and went on till 27 Sep, 2018. The trend delivered -3.3% losses to investors. This was followed by a bullish trend that started on 12 Oct, 2018 and ended on 17 Oct, 2018. This bullish trend delivered +5.75% to investors.

On monthly basis, MKTX delivered profits and losses in equal number of months. MKTX delivered profits less regularly than SP500 index. MKTX significantly outperformed SP500 index in Oct 2018, when it returned +20.58% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. MKTX had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Jun 2018 to Sep 2018) during which period it delivered -18.86%.

I think that stocks have been this tremendous, tremendous equalizer for people in this country. Guys who can't make a lot of money at their jobs have been able to make a lot of money in the stock market.
-- Jim Cramer

MKTX is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in MKTX's volatility from 14 Sep, 2018 to 24 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that MKTX 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 MKTX. Therefore, SP500 must receive a lower allocation than MKTX in your portfolio. SP500 index usually has shorter drawdown period than MKTX.

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