Housekeeping Item

I make an effort to reply to every email or comment that asks a question or that I would otherwise like to reply to. That can be tough if a comment is left anonymously. So if you choose to comment without an email address please check back to the posting to see a...

Still Not Excited

The other day I made a sarcastic comment about getting excited and buying a lot of stock. I said that really nothing has changed. We just had a good week, that’s all. I’m not sure if the selloff today is just because of BIIB or something else, but I would take you back to what so many people were calling for in months past; a range bound market. It would be easy to let a given week move your sentiment, but don’t succumb. Fundamentally I don’t see a lot of change on the way, but I could be wrong. The areas that worked in 2004 are still working, and the ones that didn’t still aren’t. Giving up entirely on something that isn’t working would be a mistake. It feels like the beta names may have exhausted the sellers, some of them anyway. It seems like the beta names are only lagging as opposed to going down a lot, this is just anecdotal to the ones I own or follow. A turn around is underway or it isn’t, but missing a turnaround could derail your entire...

Biotech Shredding

Today’s action in the biotech sector teaches, and validates, all sort of things to people that invest for themselves. Elan (ELN) and Biogen Idec (BIIB) pulled their drug Tysabri because of side effects that caused a fatality. ELN is down by 68% and BIIB is down by 46% as a result. The other day I wrote about picking stocks like Anheuser Busch not being that difficult but that trying to game an FDA approval is a different story. Today makes the point for me. The story behind this drug sounded great from the start, but most of the stories do. Both stocks have had a major lift because the Tysabri story was so exciting. Clearly the news came out of nowhere. I think that if there was any visibility to this happening neither stock would be down this much. I have exposure to BIIB for some clients through the iShares Nasdaq Biotech Fund (IBB). BIIB has about a 6% weight in the fund but I’m not sure if the iShares site has adjusted that info for today’s move or not. Other clients have exposure to a biotech stock that is not impacted by today’s story. The Irish Stock exchange is also feeling some pain down more than 5% due to Elan’s weighting, but interestingly the financial sector in Ireland is up today. I think it makes sense to explore what impact owning either of these stocks in a properly diversified portfolio would be. In the accounts I manage the largest weight a biotech stock would have is 2%. If I had a 2% weight in Elan today’s drop would...

Answering Comments

I had a couple of good, but anonymous (no email), comments left yesterday that I’d like to address. The easy one asks how I access CNBC Asia and Europe in Arizona. CNBC has created a channel called CNBC World that runs CNBC Asia from 3pm mountain time to 9pm. CNBC Europe runs off and on from 10pm mountain time until noon:30 the next day. I know the channel is available on Directv and Dish Network and it is advertised as a digital cable channel buy I don’t know if any cable systems offer it. The other comment posted was from someone named Luca who had this to say; I disagree with you about the role of individual stocks in average investors’ portfolios (remember, Ben Stein’s article is about basic advice). There’s nothing basic about investing in individual stocks. Without a decent understanding of markets, sectors, the economy and company financials (at the very least), buying a stock is a pure bet. And if BUD is such a no-brainer, why don’t you own it? 😉 I like these types of comments. Luca challenges the thought process behind the post which has the potential to be constructive. To Luca’s first point, one of the primary focuses of the blogs I am familiar with is to help create a decent understanding of markets, sectors, the economy and company financials. For people that do not have the time to, in any way, do it for themselves there are products and people to help. Based on the public comments and private email I receive, I have to say that most blog readers have an...

Compromise

I am watching the Oscar’s with my wife with no stock market interruptions (except for Bill McLaren). Mixing a few pop culture items that have nothing to do with investing I would ask how long has the Counting Crows guy looked like Sideshow...