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

To: Proton who wrote (23091)	7/12/1998 8:24:00 PM
From: WTDEC	Respond to of 32384

Hello p2. Thanks for the thoughtful and lengthy reply to the relative performance discussion. We seem to agree on nearly everything. One clarification, if I may. Your observation that "underperformance does not imply, ipso facto, undervalued" is a point I strongly support and I did not mean to suggest otherwise. I do think under-performance can 'illustrate' an undervalued situation, since undervalued is a comparative term which indicates the value is less than something else. And, it goes a step further by strongly implying that the lower value is not warranted. We agree for sure on the fact that biotechs have lower values today relative to other sectors than was the case over the past few years. I also think we agree the lower relative value is not warranted. We may have a disagreement on whether LGND is in this category; I believe it is. We seem to disagree on what is the benchmark for performance for money management. As you know there are many billions in money market funds and bond funds, so there are benchmarks appropriate to those asset classes. Many individuals and institutions hold some, or even all, of their invested assets in these fixed income assets. There are good and valid reasons to do so despite the fact that the stock market has provided better returns over time. Some are not emotionally able to deal with the roller-coaster stock market moves, lack the patience to persevere during prolonged periods of poor returns, or more commonly just don't have a long enough time horizon to weather the severe declines which occur periodically in the stock market. The equity market index issue is more subjective and those supporting the S&P 500 remain quite common. I feel the S&P is not as a representative of the overall US stock market as the R 3000. The S&P is an arbitrary composition of 500 stocks selected by the people at S&P. It is mainly large cap companies and has undergone several design criteria changes over time. When first created, 5oo large company stocks was a far better representation of the US public markets than the popular index of that time, the Dow, or than it is in today's world. In recent years, many (but certainly not all) institutional investors have embraced the Russell 1000 as more illustrative of the US large cap market and the R 2000 as the proxy for the US small cap sector. The only rule is rank by cap size, so it is not as arbitrary and it obviously covers far more. I'll continue on the next post, to hedge the risk of losing this write up.

To: Proton who wrote (23091)	7/12/1998 8:49:00 PM
From: WTDEC	Respond to of 32384

P2, continuing from my last post, I have to agree with the following: < A retired Wall Street heavy put it succinctly: "If you're three years early, you're not early. You're wrong." > Hindsight lets all of us see the errors in our judgments. But, most of us diversify our investments to hedge against being wrong (three years -and counting- early in the case of biotechs) simply because there is no way to know in advance if we are completely correct. Fortunately, in my case (to take the example I am most familiar with) I have had a large portion of my portfolio in Internet and tech stocks (in addition to a large portion in biotechs). I have been rolling gains here into more biotechs because I, and I believe you too, see them as undervalued. Maybe three years from now our friend, the Wall Street heavy, will say we were right. Cheers, Walter