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Biotech / Medical : ATIS is on the move!
ATIS 0.1000-47.4%Apr 14 5:00 PM EST
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To: Harry D. Kramer who wrote (1225)12/15/1997 9:31:00 AM
From: Harry D. Kramer  Read Replies (2) of 2205
 
Some big-picture discussion points for biotech investors:

1.) Lower interest rates:
Most likely we will see lower interest rates in the next 12 months. A plus for biotechs because most of the companies have no current revenues and therefore are valued exclusively on discounted future cash flows. Todays value of future cash flows goes up if interest rates go lower. The leverage of this relationship is way above average in biotechs.
2.) Asia-crisis & currency devaluations:
There are not a lot of companies out there that will not be affected by this. Biotechs are one of the few.
3.) Deflation risk & lower economic growth: once again the biotech companies are one of the few that will most likely not be affected by this if it happens.
4.) Money pouring out of high tech:
Where will all the money go that is currently pouring out of INTL, CSCO, AMAT and all the others? Aren't commercialization stage biotechs (GENZ, AMGN, BGEN, ....., maybe even ATIS), the high-tech pharmaceuticals of the future, a good alternative? They at least do not have the slowdown, competition and product pricing risk that is currently the biggest fear with the real high-techs.

That are just four points why I think it's not a bad idea to have biotechs overweighted right now. IMO, the relative risk of the group is declining. Who disagrees, and why?

Harry
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