VULCAN MATERIALS CO

99.66 -1.85 (-1.85%) Sell

Stop-loss on the minds of VMC investors as it delivered massive losses

13 min read

VULCAN MATERIALS CO was among the worst performers on Tuesday. It lost -1.85% to close at 99.66. On a day when the overall market breadth was 35%, it closed higher than 11% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.

[Themes containing VMC]

Buy-and-Hold investors in VMC experienced a maximum drawdown of -27.13% over the last three months. It lost -9.14% during this down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.

Trend

VMC has been underperforming the SP500 index in recent time, after having outperformed till 10 Nov, 2016. Over the last 2 years 11 months and 7 days, VMC underperformed the SP500 index on 50% days. Which indicates that on days VMC underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months VMC was mostly loss making and delivered on average -0.11% per day. It's best return during this period (of +17.49%) was on Tuesday, 30 Oct, 2018. While it's worst loss in the same period (of -5.19%) was on Tuesday, 4 Dec, 2018. There was initially a bullish trend during this period which started on 18 Sep, 2018 and went on till 21 Sep, 2018. The bullish trend returned +4.07% to investors. This was followed by a bearish trend that started on 17 Oct, 2018 and ended on 22 Oct, 2018. This bearish trend lost -10.29% of investor capital.

VMC had 5 profitable and 7 loss making months over the last year. During the last year, VMC underperformed SP500 index on monthly return basis. VMC significantly outperformed SP500 index in May 2018, when it returned +14.37% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. VMC had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Feb 2018 to Apr 2018) during which period it delivered -16.56%.

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VMC is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in VMC's volatility from 3 Oct, 2018 to 30 Oct, 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 VMC 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.

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

Based on your interest in VMC you may find it interesting to know that VIPS, NVCN and IX are all extremely risky investment candidates that must be evaluated carefully. Investors with low risk profile are better off avoiding them till their performance becomes more consistent.

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