82.5 -1.8 (-2.18%) Buy

Don't go shopping for PM now, it is underperforming the market

13 min read

PHILIP MORRIS INTERNATIONAL INC. has destroyed investor wealth today. It delivered -2.18% to close at 82.5. It's recent 5 day performance has been +0.62%, -0.6%, +0.13%, -0.4% and -0.86%.

[Themes containing PM]

PM showed a bullish trend over the last 3 months. During this period PM increased by +2.74% and saw a maximum drawdown of -8.97%. There were 2 long signals during this period that returned a cumulative of +2.0% to investors.


PM has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 7 Jun, 2017 to 4 Sep, 2018. Over the last 2 years 11 months and 10 days, PM underperformed the SP500 index on 48% days. Which indicates that on days PM underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months PM was mostly profitable and delivered on average +0.05% per day. It's best return during this period (of +3.5%) was on Thursday, 18 Oct, 2018. While it's worst loss in the same period (of -3.0%) was on Wednesday, 21 Nov, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 12 Oct, 2018 and went on till 19 Oct, 2018. This bullish trend returned +7.71% to investors.

The last 12 months saw PM's investors making profits in 5 months and incurring losses in 7 months. PM was less consistent in delivering monthly returs than SP500 index. PM was also a more risky investment than SP500 index as it's worst month in the last year, Apr 2018, returned -15.93% compared to -7.28% returned by SP500 index in Oct 2018. PM had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Feb 2018 to May 2018) during which period it delivered -26.37%. It is interesting to note that both PM and SP500 index significantly outperform during months when quarterly/annual results are announced.

The difference between playing the stock market and the horses is that one of the horses must win.
-- Joey Adams

PM 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 PM's volatility from 9 Oct, 2018 to 31 Oct, 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 PM has significant positive skewness in it's return distribution. This indicates that investors can expect PM to recover from drawdowns quickly. Which makes PM a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in PM derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

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

Based on your interest in PM you may find it interesting to know that ABMD is a mid cap that has shown remarkable performance and deserves to be on every investors' watchlist.

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