To: Mike McFarland who wrote (5718 ) 10/5/1998 5:05:00 PM From: Rocketman Read Replies (1) | Respond to
When we started the Model in April 97 we basically had paper money to invest in biotech and went for it. When we decided later that we would also use margin, we went for it and invested it too. I have no regrets about it. We have the firm belief that biotech is a great investment over a fairly long time horizon and that it will be one of the key growth industies of the next millenium. Let's see how the model looks in a decade or so. We made no effort to time the market for when we should start investing, but jumped in with both feet after V1 proposed to me that we should do it. I do regret not taking profits on certain key stocks after what were obviously unsustainable runups based on news (LGND at $18 for example) and then shorting them while they came back to reality. We have since begun shorting some stocks, but are still VERY selective about it. I am still in the belief that if the DOW does go to 6000, that money will be looking for growth areas to invest in and that it will make biotech look all the better as it has little Asian or Russian or S. American exposure and is not as dependent on the shopping whims of the American consumer as many industries are. Plus lower interest rates favor it too. But, in the past few years while biotechs have been in a bear market and the big companies have been in a bull market, why should an investor put money in a speculative industry when they can make 30% annually in blue chips and the S&P 100/500 (unless you know and love and believe in biotech like we do - biases that they are). Now that a <5% return in bonds is looking great (but even that return is plummeting), I feel that speculative issues will be looked at more favorably as a reasonable area to achieve decent returns on growth companies. And biotech certainly fits that bill.
