PAYX investors dump it
13 Dec, 201813 min read
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PAYCHEX INC has destroyed investor wealth on Thursday. It fell by -1.09% to close at 67.38. It is currently trading -10% below it's 52 week high of 75.25.
Buy-and-Hold investors in PAYX experienced a maximum drawdown of -15.06% over the last three months. It fell by -9.41% during this bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.
PAYX has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 6 Jul, 2016 to 23 Apr, 2018. Over the last 2 years 11 months and 9 days, PAYX underperformed the SP500 index on 45% days. Which indicates that on days PAYX underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
PAYX returned losses on 54% days in the last three months. During this time, it delivered on average -0.15% per day. It delivered it's worst daily return of -4.04%, during this period, on Wednesday, 10 Oct, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 2 Nov, 2018 and went on till 9 Nov, 2018. This bullish trend returned +6.07% to investors.
During the last year PAYX had 8 profitable months and 4 loss making months. Profitable number of months of PAYX and SP500 index were the same. PAYX was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -11.16% compared to -7.28% returned by SP500 index in Oct 2018. PAYX and SP500 index, both had periods of 6 consecutive profitable months.
You must gain control over your money or the lack of it will forever control you.
-- Dave Ramsey
PAYX 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 PAYX's volatility from 18 Sep, 2018 to 11 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that PAYX has significant positive skewness in it's return distribution. This indicates that investors can expect PAYX to recover from drawdowns quickly. Which makes PAYX a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
PAYX has more chance of extreme outcomes than the SP500 index. Therefore, PAYX must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than PAYX.
On a general note (since you are interested in PAYX), two small cap instruments that deserve special mention are AAXN and ZBRA. They have significantly outperformed the overall market.
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