MARSH & MCLENNAN COMPANIES, INC.

84.77 -0.46 (-0.54%) Sell

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

13 min read

MARSH & MCLENNAN COMPANIES, INC. delivered massive losses on Friday. It lost -0.54% to close at 84.77. On a day when the overall market breadth was 35%, it closed higher than 8% of the market. In comparison, the benchmark SP500 index closed today at -0.0233%.

[Themes containing MMC]

MMC showed a down trend over the last 3 months. During this period MMC lost -1.6% and saw a maximum drawdown of -11.05%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in MMC till volatility reduces and a clear trend emerges.

Trend

MMC has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 3 days, MMC outperformed the SP500 index on 55% days.

MMC returned losses on 54% days in the last three months. During this time, it delivered on average -0.02% per day. It delivered it's best daily return of +5.88%, during this period, on Thursday, 25 Oct, 2018. There was initially a bearish trend during this period which started on 24 Sep, 2018 and went on till 28 Sep, 2018. The trend delivered -3.8% losses to investors. This was followed by a bullish trend that started on 25 Oct, 2018 and ended on 31 Oct, 2018. This bullish trend delivered +9.55% to investors.

MMC had 7 profitable and 5 loss making months over the last year. During the last year, MMC underperformed SP500 index on monthly return basis. MMC delivered +4.66% during it's best month (Nov 2018), which was lower than +4.75% delivered by SP500 index during it's best month - Jan 2018. MMC 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 MMC and SP500 index significantly outperform during months when quarterly/annual results are announced.

Believe you can and you're halfway there.
-- Theodore Roosevelt

MMC 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 MMC's volatility from 13 Sep, 2018 to 26 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that MMC has significant positive skewness in it's return distribution. This indicates that investors can expect MMC to recover from drawdowns quickly. Which makes MMC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in MMC), three instruments that are extremely volatile are EPIX, IX and IMTE. They must all be evaluated prudently and investors are better off avoiding them at the moment.

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