Are you evaluating investing in PFE? Avoid as it was among the worst performers
18 Dec, 201813 min read
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PFIZER INC was among the worst performers today. It lost -1.65% to close at 42.4. It's recent 5 day performance has been -1.58%, -1.73%, +0.93%, +0.34% and -0.88%.
PFE showed a down trend over the last 3 months. During this period PFE lost -1.99% and saw a maximum drawdown of -8.28%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in PFE till volatility reduces and a clear trend emerges.
PFE has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 14 days, PFE outperformed the SP500 index on 49% days. Which indicates that on days PFE outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.
PFE was profitable on 50% days in the last three months. During this time, it delivered on average -0.02% per day. It delivered it's worst daily return of -3.82%, during this period, on Thursday, 11 Oct, 2018. There was initially a bullish trend during this period which started on 23 Nov, 2018 and went on till 30 Nov, 2018. The bullish trend returned +7.05% to investors. This was followed by a bearish trend that started on 3 Dec, 2018 and ended on 7 Dec, 2018. This bearish trend lost -5.08% of investor capital.
PFE had 7 profitable and 5 loss making months over the last year. During the last year, PFE underperformed SP500 index on monthly return basis. PFE significantly outperformed SP500 index in Jul 2018, when it returned +9.91% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. PFE had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year. It is interesting to note that both PFE and SP500 index significantly outperform during months when quarterly/annual results are announced.
My expertise was in public finance, particularly corporate taxation, since I had worked at the US Treasury.
-- Merton Miller
PFE 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 PFE's volatility from 5 Oct, 2018 to 25 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that PFE 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.
Investors trading in PFE 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 PFE. Therefore, SP500 must receive a lower allocation than PFE in your portfolio. SP500 index usually has shorter drawdown period than PFE.
On a general note (since you are interested in PFE), TYHT has performed really well and deserves to be closely tracked for investment opportunities.
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