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Biotech / Medical : Biotech Valuation
CRSP 56.61-0.6%Nov 6 3:59 PM EST
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To: enervestor who wrote (516)1/20/2000 11:56:00 AM
From: Biomaven  Read Replies (2) of 52153
 
enervestor,

Now the question is whether this move is for real
Yes

and how long will it last?
Consult your handy crystal ball. <g>

Right now we essentially have a subsector-based rally rather than an individual stock-based rally. (This theme originated with Pseudo Biologist's post earlier in this thread) If a stock is in a hot subsector (e.g., genomics) it moves, pretty independently of the stock's actual prospects. The game at this point (at least in the short term) is to look for stocks in hot sectors that will have a good news flow.

At some point the music will stop, but enjoy it in the meantime. The rally is moving downstream in terms of market cap (the big guys are unlikely to double from here, but some of the smaller stocks could easily do so if the rally continues).

Mr. Market's valuation is often pretty irrational in the short run. The "value oriented" investors who have been shorting Amazon since its inception are all dead and buried. I'm not saying yet that the full inut craziness is coming to biotech, but it's certainly a real possibility.

At heart I'm a value investor, but I'm not dogmatic about it, and so I've stayed pretty fully invested. Sure I'm anxious about these valuations, but a portfolio that gains 10% a week can buy a lot of valium. Just don't mortgage the wife and kids - at some point we'll see some 10% losses as well.

Peter
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