SCHOLASTIC CORP

44.57 -0.29 (-0.65%) Sell

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

13 min read

SCHOLASTIC CORP delivered massive losses on Friday. It returned -0.65% to close at 44.57. On a day when the overall market breadth was 35%, it closed higher than 16% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing SCHL]

Buy-and-Hold investors in SCHL experienced a maximum drawdown of -14.83% over the last three months. It returned +3.34% during this up trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals.

Trend

SCHL has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, SCHL underperformed the SP500 index on 48% days. Which indicates that on days SCHL underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months SCHL delivered losses on 54% days. However, it still managed to end this period in a profit. It's best return during this period (of +9.31%) was on Thursday, 27 Sep, 2018. While it's worst loss in the same period (of -5.62%) was on Tuesday, 4 Dec, 2018. There was initially a bearish trend during this period which started on 4 Oct, 2018 and went on till 12 Oct, 2018. The trend delivered -12.92% losses to investors. This was followed by a bullish trend that started on 29 Oct, 2018 and ended on 8 Nov, 2018. This bullish trend delivered +13.08% to investors.

On monthly basis, SCHL delivered profits and losses in equal number of months. SCHL delivered profits less regularly than SP500 index. SCHL significantly outperformed SP500 index in Sep 2018, when it returned +11.06% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. SCHL had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year.

Finance is not merely about making money. It's about achieving our deep goals and protecting the fruits of our labor. It's about stewardship and, therefore, about achieving the good society.
-- Robert J. Shiller

SCHL 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 SCHL's volatility from 17 Sep, 2018 to 7 Nov, 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 SCHL has significant positive skewness in it's return distribution. This indicates that investors can expect SCHL to recover from drawdowns quickly. Which makes SCHL a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in SCHL), three mid cap instruments that deserve special mention are ABMD, SQ and LULU. They have all outperformed the market and must be closely watched for investment opportunities.

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