I read complaints of the recent market from contributors to this thread, and I think I have something to contribute. I seek to agitate no one. I feel I would be more appreciated if I kept quiet. My contribution is called FEAR.
I became an investor about 1955, and recall many painful times in the market. In my experience, there are times that fear can be a valuable commodity. This market is overpriced. It has been so for some time. For an old man, I am and have been a high risk taker. Lots of small stocks. Technology, etc. I own IDPH, CYTC, IGEN - biotechs that certainly are less than they might be in this type market. I felt those were too good to let go. I am not a techie, but I regard IGEN as being an undiscovered jewell and the holder of a blockbuster test procedure (if my analysis is accurate). I own some technology stocks. A week ago I was fully invested; today I am 25% in bonds, the same in cash, and the remainder has been already beaten down or has more profit accrued than I want to sell and pay tax on. I know that holding good stocks through good times and bad will be ultimately rewarding. But it can be slow - few today would believe the prices available in 1974, and for a long time thereafter. I also know that watching a good stock slide down from a high sickens the stomach, and selling high and buying low produces wealth.
So I have sold some of my favorites that I regarded as delightfully promising, so that I can buy back cheaper when stocks tumble. I don't know when a decline will come; it could have arrived anytime within recent months. It may be months away. But I think P/Es are too high, that the relationship between interest and dividends is too out of kilter, and more than those, I see other nations trying to force the dollar higher in order to trim our exports. Our current account is more unbalanced than ever and I doubt the fed feels it can lower interest rates to combat those things when labor costs are trying to rise. I feel the fed would rather raise rates to guard against inflation than to drop them. And the way the market bounced back after Greenspan recently jawboned it down a bit should show that it still bubbles. But perhaps it will only drift downward a bit and then continue onward and upward. I am not a pro, I certainly do not intend to argue these assertions, and I intend to state only my fears. It comforts me that Lou Ruykeyser is adverse to my stance - and I take no joy that Elaine Gazarelli feels as I do. The fact is that you can read smoke and know better WHEN the market will move - at most you can relate present prices to past measures and make a guess. I have made my guess for the minute. I still have stocks that can go down, but I feel the comfort of cash.
By the way, my understanding of IGEN is this: it holds patents and FDA approval on two machines (one heavy, for labs, the other smaller for physicians offices) which measures reflected light. It also has a solution or medium which it markets for testing. Since 1990 they have been funded (around 75 million) by German and Japanese companies to develop the machines and to allow sale of their products. Approvals have been recent. Stock price has been fairly flat at $5-7. By knowing that two substances will unite and reflect light which the machines can measure, an unknown substance can be tested for identity by adding a known substance to it. Apparently works on DNA, nucleic acids, heart enzymes, - damn near anything. However, getting FDA approval on many tests will be slow because it must be shown that products are known to unite which will allow accurate tests. A lot of this was shown at a Chicago chemical show recently. Boeringer Manheimm is said to have taken orders for 300 machines in Europe to date and apparently production is not yet in full swing. I would like feedback from some of the doctor types who follow this thread. Suggest that anyone interested should look at 10Q which can be found at Edgar, and see the thread on the stock which gives better description that I give here. |
