Investment Hits (and Misses): The Lessons Learned
Cue Frank Sinatra: “Regrets, I’ve had a few…”
I periodically ask readers to share their biggest investment regrets. I got this email last night:
“I met my wife of 25 years in 1989. Not long after we met, sometime in 1990 or thereabouts, she asked me where she should invest her $2,000 IRA.
We discussed putting it in the newly public AOL, but her boss at Smith Barney at the time was a golfer and suggested she would be better off investing in Callaway Golf Co., which was coming out with a killer driver. I guess that driver must have been the original Big Bertha.
Well, she put the two grand in Callaway. I noticed a decade or so later that her Callaway stock was still worth about $2,000, but realized that original investment would have been worth close to $500,000 had she invested it in AOL. Big mistake!” — Brad G.
Brad, if it’s any consolation, another individual who made big investment mistakes was the great American writer Mark Twain, who was bankrupt by the age of 59. The author of such classics as The Adventures of Huckleberry Finn once said:
“October: This is one of the particularly dangerous months to invest in stocks. Other dangerous months are July, January, September, April, November, May, March, June, December, August and February.”
Of course, we don’t share Mr. Twain’s blanket cynicism about stock market investing, but it’s true that in today’s volatile and uncertain investment climate, you must be particularly prudent.
An imminent biotech bonanza?
Which brings us to the ever-prudent Jim Pearce, chief investment strategist of Breakthrough Tech Profits and our flagship publication Personal Finance.
I’ve known Jim for years. He began his career as a stockbroker in 1983 and over the decades has managed client investment portfolios for major banks, brokerage firms and investment advisors. Jim’s also a cigar aficionado with an impressive humidor in his home. The only thing he likes more than a good cigar is making money for readers.
On July 29, 2016, Jim made these prophetic observations about biotech firm Gilead Sciences (NSDQ: GILD), a holding in the PF Growth Portfolio:
“Gilead is sitting on a pile of money: $24.6 billion to be exact. The company spent $10 billion to repurchase stock during the first half of this year, but with its share price still dropping, perhaps it’s time for Gilead to use that money to make an aggressive move into the cancer immunotherapy field. It could do that quickly by buying one of the small R&D companies that could win FDA approval for a promising treatment within the next year…
It may be too late for Gilead to revamp its product lineup for 2017, but it could quickly spend a few billion dollars to buy what may turn out to be the next big thing in cancer treatment.”
Fast forward to January 3 of this year, when news broke that Gilead had hired Alessandro Riva, MD to run its hematology (blood) and oncology (cancer) treatments division. Considering Riva’s previous experience with the acquisition-prone biotech giant Novartis (NYSE: NVS), the hiring of Riva is likely to spawn the sort of M&A activity at Gilead that Jim envisioned.
This week, the investment strategists at Jefferies Group made the following observation about Gilead’s poaching of Dr. Riva from Swiss-based Novartis:
“We believe the relatively high-profile heme/onc chief hire signals an increasing focus in oncology, a welcome development, and expect Gilead Sciences to more aggressively pursue business development to build out a broader cancer pipeline — something not substantially baked into most expectations but which we believe could help improve sentiment around the name and long-term revenue prospects.”
Since January 3, Gilead shares have jumped nearly 6%, while the S&P 500 has stayed essentially flat. We’re now teed-up for a big potential payoff, which underscores the value of patience and doing your homework. I’ll keep you posted on further developments. In the meantime, if you have any feedback or questions, I urge you to shoot me an email: email@example.com — John Persinos
Another hit on the way…
Jim Pearce is watching another small company that’s about to hit it big, this time in the technology sector.
The personal computer, the smartphone and the Internet revolutionized society. We’re now on the threshold of another epochal transformation: the Internet of Things, by which everyday “smart” objects are integrated into a data-sharing network. IoT is one of the hottest investment opportunities you can find.
The familiar Silicon Valley giants are muscling into the booming IoT sector. The problem is, the investment crowd has already piled into these well-known large-capitalization stocks and bid up their shares.
However, Jim has found a fledgling hyper-growth IoT-related company that’s fast becoming an integral major player in the $14 billion smart home market. This entrepreneurial rocket has already shipped 30,000 units of its product via major retailers around the country.
The upshot: The value of this under-the-radar company is about to explode at an exponential rate.