THC is a falling knife, continues to bleed every investor trying to catch it
11 Dec, 201813 min read
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TENET HEALTHCARE CORP significantly underperformed today. It fell by -0.3% to close at 23.33. During the last week it fell by -5.97% and saw a maximum drawdown of -6.01% before bouncing back.
Buy-and-Hold investors in THC experienced a maximum drawdown of -25.5% over the last three months. It fell by -20.1% during this strong bearish trending period. There were no long signals during this period, where the short signal generated good profits of +20.1% for investors.
THC has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 26 Apr, 2016 to 4 Dec, 2017. Over the last 2 years 11 months and 7 days, THC underperformed the SP500 index on 49% days. Which indicates that on days THC underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months THC was mostly loss making and delivered on average -0.31% per day. It's best return during this period (of +8.12%) was on Wednesday, 7 Nov, 2018. While it's worst loss in the same period (of -9.41%) was on Tuesday, 6 Nov, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 29 Oct, 2018 and went on till 5 Nov, 2018. This bullish trend returned +8.62% to investors.
During the last year THC had 7 profitable months and 5 loss making months. THC returned profits in fewer months than SP500 index. THC significantly outperformed SP500 index in May 2018, when it returned +47.99% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. THC had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both THC and SP500 index significantly outperform during months when quarterly/annual results are announced.
A stock broker is one who invests other people's money until its all gone.
-- Woody Allen
THC is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in THC's volatility from 25 Sep, 2018 to 13 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that THC has significant positive skewness in it's return distribution. This indicates that investors can expect THC to recover from drawdowns quickly. Which makes THC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in THC 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 THC. Therefore, SP500 must receive a lower allocation than THC in your portfolio. SP500 index usually has shorter drawdown period than THC.
On a general note (since you are interested in THC), EHC is a small cap that deserves to be closely tracked for investment opportunities.
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