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Biotech / Medical : A crash for the markets - a crash for biotechs ?
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To: trevor john wilkinson who wrote ()12/15/1996 8:00:00 PM
From: steven stein   of 74
 
Trevor,

I am not a professional like yourself. But I feel that the money pouring into mutual funds have driven up prices so that values of stock have taken on a life of their own. Similar to diamonds - which are just pretty rocks but which have a value which the diamond companies has constantly marketed to the public. Now we are to believe that mutual funds also have some sort of intrinsic value.

Soon the public will figure out that when they have $100 invested in a drug company and that company has $50 worth of real estate and makes $1.00 per year that perhaps they have overpaid. When the next drug company goes to buy them out (merge) and only wants to give $52.00 for the $100 share there will be a large falling out in the value of drug company - and the investor will start looking elsewhere in his/her portfolio to find where the value is hidden. Then they will sell those overvalued stocks to others who had joined the rush to buy before they figure out the house of cards.

So I guess as an amateur I feel that you need to look at the value of the underlied company, figure out how many shares there are, do a little simple division, and pay what the share is worth. No matter what the investment this method will probobly perserve your capital in the long run.

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