ALTRIA GROUP, INC.

52.73 -1.16 (-2.21%) Sell

MO investors disappointed by market underperformance

14 min read

ALTRIA GROUP, INC. was among the worst performers on Friday. It returned -2.21% to close at 52.73. 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 -0.0191%.

[Themes containing MO]

Buy-and-Hold investors in MO experienced a maximum drawdown of -19.95% over the last three months. It returned -15.55% during this strong down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +10.78%.

Trend

MO has been underperforming the SP500 index in recent time, after having outperformed till 27 Jun, 2016. Over the last 2 years 11 months and 10 days, MO underperformed the SP500 index on 50% days. Which indicates that on days MO underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months MO was mostly loss making and delivered on average -0.26% per day. It's best return during this period (of +2.38%) was on Monday, 29 Oct, 2018. While it's worst loss in the same period (of -3.5%) was on Monday, 12 Nov, 2018. There was initially a bullish trend during this period which started on 2 Nov, 2018 and went on till 8 Nov, 2018. The bullish trend returned +2.65% to investors. This was followed by a bearish trend that started on 9 Nov, 2018 and ended on 26 Nov, 2018. This bearish trend lost -20.33% of investor capital.

On monthly basis, MO delivered losses in more months over the last year, than profits. MO delivered profits less regularly than SP500 index. MO was also a more risky investment than SP500 index as it's worst month in the last year, Nov 2018, returned -15.7% compared to -7.28% returned by SP500 index in Oct 2018. MO had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Jan 2018 to May 2018) during which period it delivered -20.01%. It is interesting to note that both MO and SP500 index significantly outperform during months when quarterly/annual results are announced.

Success is walking from failure to failure with no loss of enthusiasm.
-- Winston Churchill

MO 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 MO's volatility from 21 Sep, 2018 to 10 Dec, 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 MO has significant positive skewness in it's return distribution. This indicates that investors can expect MO to recover from drawdowns quickly. Which makes MO a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in MO 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 MO. Therefore, SP500 must receive a lower allocation than MO in your portfolio. MO usually has shorter drawdown period than the SP500 index.

On a general note (since you are interested in MO), two small cap instruments that deserve special mention are KEYS and EHC. They have significantly outperformed the overall market.

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