Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: Biomaven who wrote (3110)	3/16/2001 11:24:56 AM
From: Mark Bong	Read Replies (1) \| Respond to of 52153

<<So basically what we continue to see is people moving out of "new economy" stocks and into "old economy" stocks. Partly this is simply a flight to safety, and the high-volatility biotechs are viewed as "unsafe" (or at very least not conservative). Partly it is the funds that hold biotech tend also to hold other aggressive stocks that have been tanking, and so the redemptions spill over into the biotechs.>> Peter, Look at some of the big pharmaceuticals. PFE is down 10 points from its recent high, almost 25%. And yet this week they have reaffirmed guidance of nearly 25% growth in earnings this year and next. Big Pharma is supposed to be the safety net, and the fundamentals still support their growth. So why is their stock tanking? My own view is that this is a widespread panic on the downside. The Fed is way late in starting to lower rates, and they have not been very aggressive at it. The scuttlebutt down here is that the FED is worried about an overly simulative tax cut and about Japan. So they are sitting on their hands and waiting. Well it they keep delaying, the high real interest rates and the high-energy costs will tank this economy into a recession. The economy needs liquidity now, and the Fed needs to supply it fast. I think that this is what’s scaring institutions that have money to invest, so have it parked in cash now. Do you blame them? Even modest redemptions now can and are having a major negative effect on the market. In addition, there is always this panic about ASIA even though the facts are that when ASIA turns down, the net benefit to the US economy is positive. In other words, what is not good for Boeing is great news for Wal-Mart and retailers. ASIA problems bring down commodity prices including energy as well the prices of the huge amount of ASIAN manufactured goods that are sold in the US. I think that we need to have our government institutions take leadership positions now. If they do the panic will slow down, and we can begin to reconsolidate and move up. If not, watch out below. I hope that by now the FED gets the message. If you see very aggressive rate cuts next week, then things should stabilize. As to the future, it is important to understand that the formerly overvalued tech stocks are now essentially cyclical companies. Intel, Microsoft, SUN, CISCO, Nortel, Dell and Compaq are good companies with good futures, but they now the mainstream economy and their business will move in concert with the economy. Yes, they are all still good companies, and they have good growth prospects, but nothing like the past ten years. They are too big now, and the mathematics will not permit them to grow at the rates they grew before. So biotech looks good because they can grow at high growth rates, but the economy has to turn around first so that investors can feel confident that the timing is right to begin buying stocks again. By the way, what industry has more growth prospects that biotech. I can’t think of any!

To: Biomaven who wrote (3110)	3/16/2001 11:35:06 AM
From: scaram(o)uche	Respond to of 52153

>> I think it just "feels" to us that someone is picking on biotech. << I didn't say anything about biotech. I said "stocks". I only watch biotech, but I was commenting on a fund or funds that may be distressed, and an observation of what it feels like. To me, it "feels" like "Amerindo all over again".