1) Stay out of stock markets when they are about to crash.
2) Don't get into airplanes that aren't destined to land safely.
3) If a public place is about to be shot up by a crazed gunman, stay away.
4) Stay off of freeways if you are destined to have a drunken driver slam into you.
5) Pat Tillman should have gone to the infirmary instead of being on duty. Why would he want to be killed by friendly fire?
6) If a town is destined to be destroyed by a tornado or flood, don't be in that town.
7) Why were those BP workers on the rig on April 20? Didn't they
know they would be killed?
8) Don't ever marry someone just because they are cute, voluptuous and loving, etc. if you know that two decades from now they will change completely and try and take you for everything you are worth and try and keep you from seeing your own kids.
Yes, only superior methods of capital destruction through maniacal concentration & insane leverage can achieve such infinitely inferior results.
Yet Alan still manages to sucker in gullible acolytes like Bud, Sclarda & Vip.
What you actually should have learned is to never set yourself up to be
destroyed by any single mistake, because nobody knows when the next
black swan will emerge. It ain't like you got any marketable skill to
earn your money back once it's gone--nobody in their right mind would
hire you for anything.
With maniacal concentration in PFE, any one of the following three events
could cause you excruciating pain:
1) Massive legal decision against PFE
2) Major unexpected pipeline failures or product recalls
3) Macroeconomic or geopolitical development causing lows to be
1) With possibly the sole exception of the company that made Thalidomide in Europe in the '50's, I have seen absolutely NO big pharmas just destroyed by lawsuits. Not even smallish WYE with fen-phen or MRK with Vioxx.
Pfizer is just too huge to be hurt all that much - even in the event of a $10B lawsuit. WYE actually had to pay $22B and they did so over many years without their stock being hurt that terribly much.
2) There is NO pipeline failure that can hurt a company Pfizer's size. Bapi would be a disappointment to be sure but don't expect more than a 10% drop absolutely max.
3) If world events are going to hurt Pfizer, they will undoubtedly hurt most other companies even more. Diversification isn't the answer to once-in-a-lifetime adverse world events as the latest market crash clearly showed. I could easily construct a very-well-diversified portfolio of large-cap stocks that would have resulted in an overall loss of 85% or so unleveraged.
Very well stated.
The greatest risk IMHO is not Pfe-specific, but that the market declines substantially for whatever reason and, yes, Pfe wouldn't be immune no matter how low the PE would go. A new recession with unemployment and housing getting worse, with the Fed having no arrows left and major tax cuts difficult to enact with the deficit and debt so horrendous, climaxing in the willingness to buy our debt decreasing substantially causing rates to rise and completely tanking the economy and the market. This is not my likeliest scenario for the economy but it is absolutely within the realm of the reasonable outcomes. If it was my likeliest, I wouldn't just be hedging more and buying more bonds, I'd be all in cash and shorting big time.
While I would never do Maniacal Methods in any climate, things are getting scarier and the idea of huge leverage for a retiree is more than nuts.
How about, any time a stock has gained 75% in ten months, is flashing every known sell sign & you are supposedly back to even after being down by hundreds of percent, as in Mar 2009 to Jan 2010, take profits?
Same for 25% in a year, if the worst possible pipeline failure has occurred, management has warned that bad news is coming in the next Qly report & has been selling hand over fist, as in June 2007.
Stocks that gain 75% in ten months? Well, let's see now - Las Vegas Sands went from a low of $1.38 up to $2.50 within a week. Would that have been the time to be selling - at $2.50 when 15 months later it was eleven times that price?
Were folks unloading GE in droves when it went from $5.75 to $10?
How about F when it rose from $2.50 to $4? Was that the time to unload?
I hardly considered Pfizer to be overpriced at 20 bucks and still selling at just nine times earnings when they had mitigated their patent cliff and they were getting a sweetheart deal as far as healthcare reform was concerned.
I didn't dream of lightening up in January and I certainly won't be lightening up when Pfizer returns to $20. My work tells me that this is worth at least $28.20 in two-and-a-half years and I expect fair value when I sell.
I do sell when fair value is reached. I sold Tyco at $30 and I sold BVF around $20. I got out of HOG when it recovered to $35. I allowed myself to be called away from GOOG at $550.
But I'm not about to sell willy-nilly just because the stock has had a decent advance from 12.5-year lows when it's still quite undervalued in my eyes.