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Biotech / Medical : Biotech Valuation
CRSP 58.08+0.9%Dec 11 3:59 PM EST
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To: Biomaven who wrote (1031)4/28/2000 5:45:00 PM
From: Biomaven  Read Replies (1) of 52153
 
Hey - today was just like the old days (January/February 2000). Much more fun this way, but who knows how long it will last.

The correlation between the COMPX/DOW and BTK/DRG has continued exceedingly strong this week, with only two brief periods when the graphs weren't basically indistinguishable. (Yesterday midday the BTK/DRG was comparatively weaker, and today midday it was stronger.)

I do realize now that some of the very small simultaneous blips in these graphs occur because there are a few stocks that are in both the Dow and DRG indices. (Because they are in the denominator of both calculations, the graphs will jiggle together when one of these stocks moves.) It should be noted however that prior to January, these graphs appear to have no relationship to each other at all. The very close current relationship makes me wonder if we aren't now being driven by computerized trading systems.

Here's a post I made back in early December last year on the relative valuation of the BTK and DRG indices:

Message 12182915

The BTK/DRG ratio closed today at 1.29 - and there I was not 6 months ago predicting that it might reach unity someday. Seems almost sensible if you ignore the little matter of the 2.6 peak on March 7th. <g>

Peter
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