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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (13386)	11/27/2001 11:02:19 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78482

Yes, Spekulatius, I noticed that nice run in PHA that seemed to have started after you mentioned you bought it. (I was hoping for a lower entry price and did not buy any. Did add a little bit though to ELN as I mentioned.) I also will add to my small NVS position if stock drops further. I'm considering same with MRK. Ditto SGP. BMY maybe now is a decent speculation too, but I'm still overweighted in that stock. These pharmaceutical stock are unanalyzable, imo. No matter how few stocks one follows or for how long one follows one of these companies or how competent one's analyst skills are. There are just too many unknown factors and surprise blockbuster drugs or competitors or legal problems, and so on. It sometimes seems to me that professional analyst opinions on these stocks are contrary indicators - buying the stock(s) they downgrade results in profits after a couple of years. I can dismiss these pharma companies quickly enough though as not being absolute value stocks (as I interpret value). They are more relative values: stocks with good past history and relatively low p/e's and with some indication the companies might be around to eventually have important drugs that increase earnings and help the stock regain investor attention (stock price reversion to mean). In my opinion, this is where a diversified (more than 25 stocks)value investor can fish a bit. Pharma stocks add a type of diversity that value investors with concentrated portfolios wouldn't consider at pharma's current prices. And because value investors with diversified portfolios are often paid for their patience (and thus are, or should be, patient), value investors ought to be able to hold on to these stocks for the upside just as they hold value stocks. (Not that taking a quick 8 point gain or so on a roughly $38 stock is wrong! Congrats.)