Thanks for the much-needed vote of confidence, Lyle!
Actually, my background helps and hurts my stock picking, It helps because I am familiar with the academic studies that show that stocks are far and away the best investment (much better than real estate, cash, bonds, or bills) over long periods of time (going back to the Civil War even!). So I have a strong bias towards stocks. This finance literature also shows that it's pretty fruitless to try and time markets. In fact, most of the appreciation in stock markets generally (not necessarily individual stocks) occurs over very short periods of time. So in order to participate in this appreciation, investors really must be fully invested at all times. Else, you may miss one of these bouts of appreciation, which may be as short as sixty days.
My background is a hindrance of sorts because I've also been taught that individual stock picking is basically fruitless unless your portfolio is very diversified, probably with at least 40 to 50 stocks. This is common academic theory, but super investors like Warren Buffet don't believe it and don't practice it. But theory strong suggest, and so does the evidence, that very few money managers consistently beat the market over long periods of time. Hence, if I were true to my academic background, I would be invested in a Vanguard S&P 500 index fund, not a bunch of wild biotechs.
My background aside, I am heavily invested in biotechs (again, breaking the diversification rule). But I have at least two good excuses for this: one, I think the sector's time has come and it is still very undervalued; two, it takes a long, long time to learn the basics of biotech investing (if you are not in the medical profession, at least), so it's not worth while to learn it unless you're going to invest in more than a handful of biotechs.
My favorite biotechs now, stocks in which I either have invested or are waiting for prices to fall a bit, are IMUL (real cheap), Amylin (very cheap), Arris Pharmaceutical (pretty cheap), Vical (which is getting pricey), and one that I believe is new to this board, OraVax. ORVX may be an undiscovered gem; I'm still investigating.
Please don't take the above list to mean that these are the only good biotech companies around or even the best values; they're just my favorites at current prices. I also try to stay away from "controversial" companies, where the analysts may be deeply divided (SMTG, for example), because I have difficulty evaluating conflicting scientific arguments.
I always welcome opposing viewpoints and I'd love to hear what other bargains may be still out there.
Paul |
