Miljenko,
If you are still anxious, call you doctor and ask (not for prescriptions) for investment advice. <g>
That reminds me of a comment I made on this thread in a very different time - Jan 20, 2000, about 6 weeks before the bubble burst:
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.
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And this post a few weeks later is also interesting in retrospect (recall the dot.coms were still very much riding high at the time):
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But to get back to your post. I basically take the same general approach as you (and the VD Portfolio) - buy and wait for years if necessary. (But be prepared to sell if there is an unjustified short-term pop). My attempts at imitating Rick's successful short-term trading have been pretty uniformly disastrous, and so I now stick with what has worked for me. The weighted-average holding period of the stocks in my portfolio probably exceeds two years.
Let me cite a concrete example of my strategy because it is relatively easy to analyze. Consider ITMN. It has a market cap that dipped to under $300m last month. They have an approved drug (gamma interferon), so there are no hidden safety concerns. They are running a Phase III to try to demonstrate efficacy for IPF, a horrible and fatal disease. All the anecdotal evidence (quite a lot of it) indicates that it works, and there is clearly no alternative treatment currently available or even on the distant horizon that works even slightly. If the trial is successful (we should know next year) sales will rapidly ramp up, perhaps to $500m a year or more. (One analyst estimate has peak sales of $750m). There are also several possible other conditions where this drug may work.
So it doesn't take any brilliant analysis to see that on a risk-reward basis this stock is cheap, even at its present MC of some $500m. If the trial works, the stock will be a multi-bagger, irrespective of what the rest of the market or the economy is doing at the time.
It's opportunities like that that make biotech irresistible to me, you and to the other SI bionuts. If you can put together a basket of 10 or more such stocks and wait patiently you will be well rewarded.
Peter |
