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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).

+ Biotechnology 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.

For Business Week's cover story, click here.

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 classes.

In other words, they're warning against you investing in all the asset classes they can't (or won't) invest your money in.

Harry's 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:

Ivan 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 your interest.

Chris Pizzirani
Executive Director – Broadband Solutions, Verizon

Maybe I'm missing something? I email back:

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?"

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:

The telecom "boom" and cheap stocks:
Don't 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.

Useful stuff:
+ 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 Outlet. Click here. And Sierra Trading Post. Click here.

What not to eat:
A large corporation recently hired several cannibals.
"You are all part of our team now", said the HR rep during the welcoming briefing.
"You 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".
The cannibals promised they would not.
Four weeks 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 her?"
The cannibals all shook their heads "No".
After the boss had left, the leader of the cannibals said to the others,
"Which one of you idiots ate the secretary?"
A hand rose hesitantly.
"You 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!!

How 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?
To which the man matter-of-factly replies, "Those are called condoms, son. Men use them to have safe sex."
"Oh 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?"
The dad replies, "Those are for high school boys, one for Friday, one for Saturday, and one for Sunday."
"Cool" says the boy. He notices a six-pack and asks, "Then who are these for?"
"Those are for college men," the dad answers, TWO for Friday, TWO for Saturday, and TWO for Sunday."
"WOW!" 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.......

Harry Newton

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 . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. That money will help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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