173.42 -2.01 (-1.16%) Sell

Prayers for VRTX investors as it significantly underperforms

13 min read

VERTEX PHARMACEUTICALS INC is a falling knife that can bleed you if you catch it today. It delivered -1.16% to close at 173.42. During the last week it increased by +0.7% and saw a maximum drawdown of -1.16% before bouncing back.

[Themes containing VRTX]

VRTX is currently in a bearish trend. The current bearish signal has generated a profit of +0.43% for investors in the last three months.


VRTX has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 22 Dec, 2016 to 24 Jul, 2017. Over the last 2 years 11 months and 9 days, VRTX outperformed the SP500 index on 49% days. Which indicates that on days VRTX outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.

During the last three months VRTX delivered profits on 55% days. However, it still managed to end this period in a loss. It's best return during this period (of +4.94%) was on Wednesday, 7 Nov, 2018. While it's worst loss in the same period (of -6.36%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 8 profitable days, which started on 21 Nov, 2018 and went on till 3 Dec, 2018. This bullish trend returned +14.74% to investors.

The last 12 months saw VRTX's investors making profits in 7 months and incurring losses in 5 months. VRTX was less consistent in delivering monthly returs than SP500 index. VRTX was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -11.54% compared to -7.28% returned by SP500 index in Oct 2018. VRTX had a shorter streak of profitable months than SP500 index. It only went up in 5 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.

VRTX 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 VRTX's volatility from 3 Oct, 2018 to 26 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that VRTX 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 VRTX 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 VRTX. Therefore, SP500 must receive a lower allocation than VRTX in your portfolio. SP500 index usually has shorter drawdown period than VRTX.

On a general note (since you are interested in VRTX), three large cap instruments that deserve special mention are AMZN, UNH and PFE. They have all outperformed the market and must be closely watched for investment opportunities.

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