I will send the url to this post in an email to Fleckenstein--let's see if I get any sort of response.
Hey there Bill--I read through "Thirteen Rules of Investing in the New Era" and there are a few items in there that remind me of myself--but I feel compelled to defend myself, a person who is not diversified, and as somebody that a fellow like yourself might point to and say, 'now there is a perfect example of somebody swept up by the mania'.
A few years ago I started dabbling with individual stocks, I'd found that no matter what mutual fund I happened into, that fund would lag the market. So I gave up on mutual funds, and each year, for the last three years, I've got triple digit gains for myself, in fact, this year I am up 460% (however this is down from a gain of over 900% a few weeks ago) ...which brings me to my point: Diversification?!
I'd started looking into the so-called old economy value stocks a few weeks ago, as a way of making my 100% biotech portfolio look a notch more 'conservative'. But I found that even after getting into Boeing, and Washington Mutual, and Burlington Northern, and JC Penny--I didn't feel like I knew what I owned...so I went right back into my biotechs. Rats--the value stocks would have done well for me relative to biotech these past few weeks, but I can't beat myself up too much --I'd go mad!
I own shares of a dozen biotech companies, I've done my research, and I think that if I hold these companies, I will do well over the next few years. Well, it is harder to think that way when your portfolio is down 50% from the highs... For now, I regard this tech selloff as a shakeout. It hurts, but why should I sell those companies which I understand pretty well--just because market gurus keep talking "diversification". You hear a lot of people bad-mouthing biotech, they say that a person cannot really understand biotech, and you shouldn't own what you cannot understand--isn't that just a lazy way of badmouthing a very promising sector of the market,
which just happens to be exceedingly volatile. Or these gurus go on about the lack of earnings (as if biotechs are incapable of bringing drugs to market, ha! My second largest holding is Gliatech--my goodness, a biotech with products, who would know!)
Anyway, it is quite something to experience volatility in the markets, but it is not enough to convince me that I am wrong to hold the stocks I own. Does that make me a contrarian?
Nobody told me to sell my biotechs several weeks ago (I wish they had) but I wonder if folks will now tell me to sell when many biotechs are nearly back to where they started before the February feeding frenzy.
--Mike McFarland |
