8:30 AM Friday, June 3, 2005: I
don't own many stocks. But I do own biotechs -- Hana Biosciences (HNAB), Manhattan
Pharmaceuticals (MHTT), Novadel Pharma (NVD), Point Therapeutics (POTP) and
TriPath Imaging (TPTH). I must be a genius about biotechs because Business
Week has a big, positive cover story this weekend.
+ It has been
30 years of promising research and crushing commercial disappointments. Now
a burst of breakthroughs may be the tipping point.
+ The times are changing. The past 30 years of biological discoveries, insights
into the human genome, and exotic chemical manipulation have unleashed a wave
of biological drugs, many of them reengineered human proteins. These molecules
have the power to change the prognoses for a huge range of diseases all but
untreatable just five years ago.
+ Recent weeks, for example, have seen announcements of startling advances
against cancer and age-related blindness, diseases with miserable outlooks
before. Cancer patients in particular have reaped rewards from biotech. A
decade ago there were fewer than 10 oncology drugs in clinical trials, most
of them highly toxic chemotherapies. Today over 400 cancer drugs are being
tested in humans, and almost all are targeted biotech medicines designed to
produce minimal side effects. (See also yesterday's column).
has finally come of age. This declaration may bring to mind the hype that
has swirled around biotech so many times in the past. But a growing number
of scientists and industry executives say today's enthusiasm is based on a
new reality: Drugs actually exist. There are 230 medicines and related products
created from biotech techniques.
+ Last year
alone, the Food & Drug Administration approved 20 biotech drugs, among
them treatments for insomnia, multiple sclerosis, severe pain, chronic kidney
disease, incontinence, mouth sores, and cancer. The Tufts Center for the Study
of Drug Development estimates that at least 50 of 250 biotech drugs currently
in late-stage clinical trials should win FDA approval, a success rate almost
three times better than the pharma industry standard.
Week's cover story, click
The five biggest mistakes investors are making in today's
uncertain financial marketplace. Managing money is extremely lucrative.
One percent of $100 million under management gives you $1 million a year. To
earn the money, all you have to do is stick the money you're managing in the
S&P 500. Bingo: You'll never do worse than the index you measure yourself
against. You think I'm kidding? No way. I can show you a bunch of managers who
do exactly that.
Money managers take many routes to raise money. There's advertising. I've warned
against the likes of Superfund and Dreyfus. There are BubbleVision
(CNBC) appearances. Managers who waste large amounts of time on CNBC don't do
a brilliant job managing money, e.g. Jim Awad. And there's press releases. Thomas
A. Muldowney, Savant Capital Management, Justin D. Stets, Carlson Capital Management,
and Jeff Buckner, Plancorp, Inc. hired a PR person to promote their investor
seminar. The PR person convinced them to give the press a few crumbs of news:
The panel of
advisors from Illinois, Minnesota and Missouri will focus on the following
errors: (1) over-concentrating in real estate; (2) chasing foreign investments
returns; (3) short-term approaches to tax avoidance; (4) ignoring the real
costs of owning investments; and (5) treating "hot" investment alternatives
(such as hedge funds and private equity funds) as though they are real asset
In other words,
they're warning against you investing in all the asset classes they can't (or
won't) invest your money in.
Stupid Test for buying (or not buying) stocks: Begin
a conversation with the CEO. Email works. Make a suggestion. Ask a question.
See what response you get. Judge the stock by the response. Friends of mine
have weekend houses in Verizon territory. Many have asked me to ask Verizon
for a weekend DSL rate. So I email Ivan Seidenberg, Verizon chairman and CEO.
The stupid, self-focussed, condescending response:
asked me to respond to you. As you know, Verizon's strategy is to be responsive
to the market place. With that said we have not yet seen customer demand for
the sort of "weekend DSL" service you suggest some of your friends
would like. But the broadband marketplace is continually evolving, so we'll
watch developments and take appropriate marketing actions just as we have
been doing for some time. Frankly, at $29.95, we believe we offer a great
deal on DSL, and certainly one that beats our competitors in this area --
the cable TV providers -- even for those who only use DSL occasionally. And
compared to hotels charging $10 or $15/day, ours is a great rate even if customers
only use DSL on weekends!
Thank you for
Executive Director Broadband Solutions, Verizon
Maybe I'm missing
something? I email back:
My prediction: My
email conversation with Verizon will go on for several weeks and accomplish absolutely
nothing. I will lay dollars to a donut that Mr. Chris Pizzirani owns an insignificant
number of Verizon shares. Which actually looks like one of his better decisions:
How can you
"see" customer demand for a weekend DSL if you've never introduced
it? You may believe you're offering a great bargain at $29.95 a month. But
my friends -- who are your customers -- say they would like a weekend
DSL rate for less money. Why is that difficult to understand?"
The telecom "boom" and cheap stocks:
buy $2 stocks. They always lose you money. On this, I agree with Cramer.
+ Don't buy "cheap" telecom stocks -- like Nortel, Lucent, JDSL. They
used to be $4. They used to be $6. They used to be $8. There's a reason they're
now $2. There is NO boom in telecom. (Verizon's lack of marketing savvy is a
key leading indicator.) That's the first point. The second is -- Don't try to
catch a falling knife.
+ Post-It Super Sticky notes leave a residue. Dumb idea.
+ Cars need to be driven. The rotors on my country car rusted out because I
don't drive the car enough.
+ It takes 11-hours to get a new Windows PC set up the way you like it -- assuming
you can find your original software discs. Better and faster: install more memory
in the old machine.
+ Athletic shoes -- for tennis or running -- wear out. Not on the outside. But
on the inside. They lose the cushioning that protects your feet. Junk them.
There are plenty of places to buy new sneakers cheap, e.g. Joe's New Balance
here. And Sierra Trading Post. Click
What not to eat:
A large corporation recently hired several cannibals.
are all part of our team now", said the HR rep during the welcoming briefing.
get all the usual benefits and you can go to the cafeteria for something to
eat, but please don't eat any of our employees".
promised they would not.
later their boss remarked, "You're all working very hard and I'm satisfied
with your work. However,
one of our secretaries has disappeared. Do any of you know what happened to
all shook their heads "No".
boss had left, the leader of the cannibals said to the others,
one of you idiots ate the secretary?"
A hand rose
fool!" the leader continued. "For four weeks we've been eating managers
and no one noticed anything. But NOOOooo, you had to go and eat someone who
actually does something!!
condoms are marketed:
This one is for Todd.
A man walks into a drug store with his 11 year old son. They happen to walk
by the condom display, and the boy asks, "What are these, Dad?
the man matter-of-factly replies, "Those are called condoms, son. Men use
them to have safe sex."
I see," replied the boy. Yes, I've heard of that in health class at school.
" He looks over the display and picks up a package of three and asks, "Why
are there three in this package?"
replies, "Those are for high school boys, one for Friday, one for Saturday,
and one for Sunday."
says the boy. He notices a six-pack and asks, "Then who are these for?"
are for college men," the dad answers, TWO for Friday, TWO for Saturday,
and TWO for Sunday."
exclaimed the boy, "then who uses THESE?" he asks, picking up a 12-pack.
With a sigh
and a tear in his eye, the dad replied, "Those are for married men. One
for January, one for February, one for March.......
This column is about my personal search for the perfect investment. I don't
give investment advice. For that you have to be registered with regulatory authorities,
which I am not. I am a reporter and an investor. I make my daily column -- Monday
through Friday -- freely available for three reasons: Writing is good for sorting
things out in my brain. Second, the column is research for a book I'm writing
called "In Search of the Perfect Investment." Third, I encourage
my readers to send me their ideas, concerns and experiences. That way we can
all learn together. My email address is .
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