Biotech Valuation Message Board

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Biotech / Medical : Biotech Valuation

CRSP 56.87

-2.3%

Dec 5 9:30 AM EST

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To: Biomaven who wrote (7494)	12/14/2002 8:04:47 PM
From: Sam Citron	Read Replies (1) of 52153

Basically there is a varying demand for high sigma stocks, and this is one of the big drivers of the biotechs. Forgive my ignorance, but I thought that sigma, as I understand it, is normally viewed by most rational risk-averse investors, if such beasts exist anywhere but in the academic literature, as a negative -- something to be pared down by creating an "efficient portfolio". You have described sigma as a "driver of the biotechs". Could you please elaborate? Are you saying that biotech investors expect to see their returns vary widely from one period to the next and that they actually cherish this characteristic? Do you? To me, this is like embracing uncertainty, a sport for only the very daring, or those with a high propensity to gamble.

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