Re: Long-term Holding
I prefer to hold long term unless stock fundamentals change.
As I've said before, I respect any investor's preferences. It's your money, after all. Having said that...
First off, "fundamentals" is a fuzzy concept, at best, when dealing with companies that are 2-6 years away from meaningful earnings. I believe it's a mistake to confuse, say, Intel's revenue growth with "pipelines," "trials," and other elements that are better described as stories than fundamentals. This is a key reason the biotechs have been such a disappointment over the past decade. A lot of investors don't buy what's being peddled as "fundamentals" by the H&Q's and the like.
Second, the emprical evidence is incontrovertible that for most development-stage biotechs, such as LGND, buy-and-hold has been an inferior strategy to buy-and-hold on earnings-generating stocks (a quick look at the chart -- or at the price of LGND on H.N.'s message zero of this thread -- proves that). I don't purport to being a James Cramer just because I trade, but we should not fancy ourselves a Warren Buffett because we stuff some biotech stock certificates in our mattresses.
The question, "Will Ligand make me a wealthy person in ten years?" is peripheral to the question, "What is the optimal use of my money?" Playing cycles, running and fading news, and holding off until approvals are granted or revenues start to accrue are all alternatives to making a stock one's spouse (I have a wife already, thank you). Any of these methods (and others) would have made you more money in LGND that B&H. Performance matters, don't you think, John?
Again, I must stress: buy-and-hold is a valid strategy, but it has provided the best returns when used with stocks with genuine revenue growth and sound management.
A stop at 11 1/2 or whatever might be good as a trade
I don't recall advocating otherwise.
Pý
p.s. BTW: no, I don't consider working capital provided by development partners as "revenue," no matter how it's booked. ;-) |
