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Biotech / Medical : Ligand (LGND) Breakout! -- Ignore unavailable to you. Want to Upgrade?

To: Flagrante Delictu who wrote (19584)	4/25/1998 12:48:00 PM
From: Peter Singleton	Read Replies (2) \| Respond to of 32384

Bernie, great post. That was my point on, I think, the VD thread. I agree with you on your assessment of LGNDW, but it does appear that you implicitly discount the percentage risk ... and I guessed you were doing so based on either a belief that the downside risk was significantly less than the upside potential, or because you were confident there was unlikely to be a change in the fundamentals that would cause you to want to sell part of your position. If those were your assumptions, they seem reasonable to me with respect to Ligand. Peter

To: Flagrante Delictu who wrote (19584)	4/25/1998 4:30:00 PM
From: WTDEC	Read Replies (1) \| Respond to of 32384

Bernie, the mantra "Volatility is risk" is the classical academic approach to markets. While it serves a useful, IMO, purpose for certain analytical exercises, it has numerous practical limitations, again IMO. BTW, I have been enjoying the Bernie/Bear discussions. Two mathematicians at their best! Regards' W

To: Flagrante Delictu who wrote (19584)	4/26/1998 9:10:00 AM
From: Russian Bear	Read Replies (2) \| Respond to of 32384

On the same old topic / off topic Bernie, You have identified our difference, exactly: <<Specifically, when I consider "risk", my principal concern is whether I can lose more money from transaction A or transaction B. So, I am contemplating "risk" to be risk of capital loss between the 2 choices we were discussing. I noticed you were talking about percentage risk...>> That is exactly it! We were _never_ discussing the same "2 choices," so we could not agree, naturally. Luckily, our difference is a semantic, not a substantive, one. In a nutshell -- using round numbers, for simplicity: (We will pretend that the differential in price was last 6.125, as you require.) Your contention is that 4 LGNDW make a superior investment to 4 LGND, for the two simple reasons that the warrant position retains the upside, while limiting the downside, and that the time premium paid is recouped in margin savings. Your proposal thus minimizes "risk," using any rational definition of that term. You are absolutely correct. The risk associated with your proposed warrant position is _lower_ than that associated with the common position to which you contrast it. I have never argued the opposite, and I never will. My contention is that 7 LGNDW make a superior, but also riskier, investment to 4 LGND. Note, at current prices, my two alternative positions require a (roughly) equal dollar-investment. The upside is magnified, but at a cost: the associated risk also increases proportionally (although, not commensurately, as it increases _less_.) There are a number of reasons why I prefer 7 LGNDW to 4 LGND, reasons that need not be repeated now. Suffice it to say that I believe it to be a positive-expectation substitution. So you see, Bernie, you and I have no argument, and never had! And, by the way, I agree with you that financial risk is the only variety of risk that it is appropriate to consider when making investment decisions. Abstract "risk" might make a good subject for a philosophy discussion, but not a finance one. Take care, RB