Aug

15

Biotech, from Tom Marks

August 15, 2008 |

T MarksA good friend from the Comex metals pits told me about a year ago he wanted to eschew the violent volatility in those markets. Recently at one point, silver had dropped about 5 1/2 bucks the last month alone, $27,500/contract.

Looking for a more placid pastime, went eyeing individual stocks. Amongst others, recently some of the biotech persuasion. Out of the frying pan, into the fire. Oops.

Bought 5000 Elan at $24, quickly went over $37. Analysts were saying eventually over $70. Clinical results come out, a few patients got sick out of 31,800 on the new drug.

Check out the chart for your basic what-the-heck picture. He didn't get out after the first big gap, saying that it was still only a few bucks underwater from his entry, and wanted to weather the storm.

The next gap though was a doozy!

Mark Isbic writes:

You can get the same momentum and potential with the Casino stocks with less risk of being blindsided by a study from pencil pushers. I'm long LVS and Wynn. At least with these you can see the future and potential with less chance of being blindsided and a large upside. Certainly the same could be said for other groups, but I'm not a professional trader like the majority here. I simply follow a few groups, build a position when they get slaughtered and hang on for the hopeful rise. As usual I'm always a little early. The only thing i own that resembles a biotech is Merck. I bought it a few weeks ago at 35 only to watch it go down to 31 or so the next day based on what else, a study on Vytorin. The shorts love to hate LVS because of the big P/E, debt issues etc., but in my humble view it has the most potential to run the fastest because it has a great storyline with Singapore's Marina Bay Sands and with most stocks it's all about the story lines.


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