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Biotech / Medical : Biotech Stock Picking for Charity - 2006

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To: Arthur Radley who wrote (155)1/4/2006 1:33:29 PM
From: Biomaven  Read Replies (1) of 592
 
As to the claim that in a bad biotech market this would enhance this individual's portfolio for winning the contest, wouldn't it also be adverse if the biotech markets soars?

Of course. But assume we have 50 entrants all long a random set of a dozen biotechs and one entrant all short a random set of a dozen biotechs. Assume that it is 50% vs 20% vs 30% that we get an up year vs a flat year vs a down year. Then the short would basically have a 30% chance of winning the contest, whereas everyone else would have a chance of around 1.4% (about 1/49th of .7).

Fair contest?

Peter
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