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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (63931)	5/22/2002 1:45:43 AM
From: Jacob Snyder	Read Replies (1) \| Respond to of 70976

OT biotech: Even though I am an MD, I realise that the MDs and PhDs who live and breathe this stuff 25 hours a day, do a bad job of predicting which products will be successfull. It is very expensive (>100M$) to do all the required testing on a product, before you get one dollar in sales out of it. So they try as hard as they can, to pick winners. Yet 80-90% of products that enter human testing, never make it to market. So, my conclusion is, it just isn't possible to pick the winners. I'd like to think I was smart enough to do so, but the evidence says otherwise. Studies have shown that most investors habitually overestimate their ability to predict the future. There is more "event risk" in this industry, than in any other I've looked at. So, I conclude that the best way to invest in this industry, is to just make a bet on the industry (when the industry and market are out of favor). A lot of biotechs used the Bubble to do secondary offerings, and otherwise fill their coffers with cash. As a whole, the industry is in much better shape financially, than in 1998. That's one reason why so many products are now in testing. This is another example of the "monetization of ignorance", money was so easy to get in 1999-2000, any dumb idea got a billion dollars thrown at it. Example: Celera Genomics: has $900M in cash, which is $13/share. No debt. Stock hit a high of 276 in 2000. Now at 14. It's not the only biotech with a market cap about equal to its cash. IMO, those who buy the stocks now, are going to get the benefit of all the wealth donated by the Exuberant a couple of years ago.