Right Only Half The Time

My portfolio consists of the winners and the dogs. The portfolio currently consists of 13 stocks (6 with gains and 7 with losses). The way to make money in the stock market is to ride your winners and to cut your losses. This requires discipline, which is something I'm still working on. I've been very good in riding my winners, but not so good in cutting my losses. Fortunately, the losses have been relatively small and make up only a tiny percentage of the portfolio. Here's the total % gain / loss for each individual security as of the close on 10/31/05. When I have some time, I'll generate the annual % return for each security.

Ticker	% Total Return
Biogen IDEC (BIIB)	-42.77%
Boston Scientific (BSX)	-12.32%
CYTYC (CYTC)	-9.69%
Genzyme (GENZ)	+267.44%
Invitrogen (IVGN)	+285.06%
Johnson&Johnson (JNJ)	+10.94%
Microsoft (MSFT)	-34.94%
Pfizer (PFE)	-23.75%
Qiagen (QGEN)	+220.22%
NASDAQ 100 (QQQQ)	+40.00%
Sepracor (SEPR)	-8.22%
Amgen (AMGN)	+47.45%
Genentech (DNA)	+307.22%

Home Buyers Market?

Our local paper, The Boston Globe, had an interesting piece on the Boston real estate market. It's definitely has turned into a buyers market with an increased supply and a decline in prices. Believe it or not, it's been over two months and I'm still waiting for the condo docs... What's up with that!? Anyways, I'm going to start looking around and may consider backing out of the condo if I find a better deal. We'll see... Here's the Boston Globe article: click here.

Invitrogen Misses... Ouch!

Invitrogen reported today after the bell and the results fell well short of expectations. The company reported revenues of $289.6 millions and earnings per share of $0.80. The stock is trading a $63.20 (down ~11%)in after hours. Well, sometimes I do make a mistake, but fortunately this is only a small mistake. I sold a chunk of the stock from my retirement account in the mid 80's. I haven't had a chance to listen in on the conference call, but it looks like weakness in bio production contributed to the miss. Bio production is basically custom made media used to grow cells in bio reactors. I doubt this is due to competitive forces. If a company receives FDA approval to use a custom made media for cell culture production, it's very difficult to switch vendors. The company would have to go through a full validation process, which would be time consuming and expensive. I would not jump in and purchase here yet, but let the stock settle down a bit. I still like this company.

EDIT: I'm just listening in on the conference call. They lost a big order from Biogen due to the withdrawal of Tysabri from the market. Also a lot of media orders were pushed into Q4.

Feeling Better...

Last week was a good indication of a short term market bottom. When you feel the pain of the market decline and almost feel like throwing in the towel; the market will start to move up. I think there's more to this rally than a one day bounce. Q4 has traditionally been the strongest quarter for the biotechs. My largest holdings continue to be the big cap biotechs (Amgen, Genentech and Genzyme). The big disappointment was in the big cap pharmas. I have a position in Pfizer and I don't need to explain further. Pfizer simply had a disastrous Q3, nothing positive at all. I wouldn't touch Pfizer and I may consider cutting that one loose. Looking forward to a strong finish...

Here are my current positions with todays % return:

Ticker	% Daily Return
Biogen IDEC (BIIB)	+1.43%
Boston Scientific (BSX)	+3.18%
CYTYC (CYTC)	+1.55%
Genzyme (GENZ)	+2.06%
Invitrogen (IVGN)	+4.12%
Johnson&Johnson (JNJ)	+0.05%
Microsoft (MSFT)	+1.29%
Pfizer (PFE)	-0.75%
Qiagen (QGEN)	+1.20%
NASDAQ 100 (QQQQ)	+1.58%
Sepracor (SEPR)	+2.66%
Amgen (AMGN)	+2.64%
Genentech (DNA)	+2.25%

Ouch... Ouch...

Yes, I feel the pain of this correction, which is often a good sign. When I see the market plummeting and I'm sick to my stomach, this usually signals a market bottom. And then there's the so called market gurus such as Bob Pretcher from the Elliot Wave Theorist, who is expecting the market to crash. Read more about Bob Pretcher: click here. With so much pessimism out there, all the pieces are in place for a market rally. We'll see...

Two Down and One to Go

Two of the big three biotech stocks in my portfolio have reported earnings. Last week we had the good results from Genentech. This morning Genzyme reported strong earnings, which beat analyst estimates. The company reported revenues of $708 million and earnings of $0.61 per share. The stock just nudged a little higher due to the overall weakness in the overall market. Tomorrow, Amgen, the last of my big three biotech holdings will report earnings. I also expect Amgen to report solid numbers. Overall this has been a very good quarter for the life science companies. The big cap pharmas are also starting to report and Novartis really impressed with their numbers today. I wish I didn't sell Novartis; it's still one of my favorite big cap pharmas.

Fisher Scientific and Invitrogen?

During market corrections, I like to scan for stocks with strong relative strengths. Those are the ones that usually rise when the correction is over. I noticed that Fisher Scientific (FSH) and Invitrogen (IVGN) both gained ~ 1% on double their average volume. This is pretty significant considering the market sold off hard. Take a look at today's action for Fisher and Invitrogen. I'm not making any moves based on today's observation, but something is up with these guys.






Note: I have a position in Invitrogen.

Good Numbers From Genentech

Genentech reported very good numbers after the market close. They generated revenues of $1.75 billion and earnings per share of $0.35, which beat analyst estimates. Investors are pleased with the numbers and the stock is trading up 5% in after hours. Amgen and Genzyme will report next week and both should deliver solid numbers as well.

The cnnfn web site had a nice chart comparing the p/e and eps growth rate for some of the biotech and pharma companies. Pricey, but worth it? My answer is YES!

More Genentech

Today, I made some minor adjustments to my retirement portfolio. I sold Novartis (NVS) today for a ~9.6% gain over a three month period. I used the cash from the Novartis sale and purchased some more Genentech (DNA). So this is my third purchase of Genentech over a three year period. See the chart below for the Genentech purchases.













Genentech reports after the bell today. The results will be good, but how good?

What To Do?

So what have I been doing in the face of the market correction? Nothing, I'm just letting the stocks come to me before I start buying. A lot of stocks sliced right through their 50 day moving averages, which is usually a good short term support. What I would like to see is a climatic sell off. The market gaps down big on high volume at the open, but starts to rally towards the close. That would be the all clear signal to jump back into the market. Fear has been building, but we're not there yet. It may be ok to just nibble at stocks, but that's about it. Remember the old sayings: "Never fight the Fed" and "Don't try to catch a falling knife." Things to consider...

Biotech Rally Continues?

It looks like everything is in place for the biotech rally to continue. I was just checking out the latest issue of Biocentury and they had an excellent write up on the biotech rally. This years rally in the biotech stocks has been based on strong fundamentals and not based on story companies. The rally has been led by the big caps: Amgen, Genentech, Genzyme and Gilead. All of these companies reported strong earnings and this is what ultimately drives the stock price. There's also lots of liquidity flowing into the early stage biotechs. I didn't realize, but this is shaping up to be the second best year for public financing of biotech companies. The ipo window has opened for the upstarts and they are on track to raise more than $22 billion this year. This can be good and bad, an increase offering of ipo's usually signals a top for the sector. In the case of the biotechs, investors aren't simply throwing money at the new offerings, but rather picking the one's with strong pipelines and clinical data. My gut feeling tells me that the rally continues. Of course I'm a bit biased...