Biotech Stocks - Venture Investing

Investment strategies abound.  The average investor can look to indexing, or modern portfolio theory to generate returns, they can buy options, derivates, bonds, or ETFs.  The ways to make money in the market are endless, however, one method - a popular strategy first implemented in the 1970s and 1980s holds our particular interest today . . . Venture Investing.

Now before you roll your eyes and think venture investing is only for those “Sand Hill Road” types, the GQ reading Type A guys playing Polo in the afternoons, you would be mistaken.  There is a legitimate strategy here and you just need to know the secret and most importantly how to apply it. 

So what is the secret you may ask?  Simple, and the “smart money” has known about this for years . . . most of your investment gains come from a small handful of investments.  You always hear about the homeruns – like the VCs who invested in Google, or Intel, or Cisco – their original investments are now counted in the billions.  However, did you look at all the other investments those savvy investors made?  I bet not . . . what you will find is fascinating. 

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Every winner like Google or Cisco is followed by 10 or 20 or 30 losers – that’s right, complete losses!  The great savvy investors who made billions in these successful companies also lost millions and millions and millions on tens if not hundreds of other investments. 

So what is the strategy you may ask . . .  simple – the Venture Investing strategy is that for every 10 investments made ONE (yes, one and only one) is a home run!  Two or three of these great investments break even or make a little money.  And the rest?  The rest are worthless!  

Now how can you make money this way?  How can you as the average investor apply this strategy?  Simple, the winners are so good, you make so much money, it greatly outweighs the losses incurred from all the other investments you make.  The little guy who is not floating on a pile of money can implement this strategy by looking to the high risk, high reward industries and spreading his investments amongst the best of the companies – but no less than 10!

A perfect example is Dendreon (DNDN) a high risk, high reward biotech stock that you will find in other parts of this newsletter.  Their stock was languishing at a mere $4 per share for the longest time.  You could have picked up basket loads of this stock and not worried about a thing.  Then the news announcement hits – that’s right, they had a Prostate Cancer Vaccine that was approved by the FDA just this last week and . . . . well, you know how this ends . . . the stock is up more than 300% from the beginning of the year! Imagine that a run from $4 to more than $15 and who knows how much higher it will go!

Now it may be too late to invest in this company, but there are hundreds of other biotech stocks out there – spread your investments around, and before long you will have a few “home runs” that far outweigh your losses!

•  Prudential initiated research coverage on Ford at an underweight rating (big surprise)!

•  Deutsch Securities upgraded several of the airline stocks, including Air France KLM, British Airways, and Ryanair.  They noted that the stocks will benefit in 2007 from past cost cutting actions. 

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