You can easily find that post by clicking on my id. When you do, you will find that my point was this: Even though I saw the biotech correction coming at the end of February and sold GILD out of my IRA at very near the high, and got back into it in the 70's, I still would have done better just holding it. (In fact, I essentially tripled up on my position on the rebound.) However, while selling the shares out of my IRA may have cost me a few points, it hedged the position in my taxable accounts. When you click on my id you will also see that I am interested in quite a few stocks. Again, I repeat my question: What is your advice to this individual who has just put about 80% of his liquid assets into GILD today? Mine was to sell half on Monday and put in buy orders at staged prices below Monday's close.
All of my portfolios are actively managed. Two are managed to maximize long term capital gains. The IRA is managed to maximize gains and, to some degree, to hedge risk. I take it that you disagree with my recommendation that the original poster lighten up on his position ahead of earnings and put in some buy orders well below Monday's close. What is your recommendation?
When you have virtually all of your net worth tied up in one stock, there's nothing stupid about putting in a stop loss. However, exiting a very large position all at once is no more sensible than entering a very large position all at once, as you apparently have just done. Also, while I believe strongly in this stock, there is no such thing as a "no brainer". Note that between Feb. 25 and April 11, this stock fell from a high of 84.88 to a low of 63.56 - a 25% drop in less than a month and a half - for no other reason than the fact that the entire biotech sector was sold off. The fact that this stock recovered fairly quickly - it had recovered the 85 level by the beginning of July - is testimony to its strength. A lot of the more speculative biopharmas have never come back. Many of these were considered "no brainers" by their enthusiasts.
You seem to be jumping in and out of the stock with your whole bankroll. Now, after jumping out at 95 with a 2 point profit, you have jumped back in at the high in advance of earnings. My own approach - except in a case where the basic premise behind a stock is called into question - is to sell half. Yesterday, I was lucky enough to have some DAN ahead of their strong earnings. Today I sold half of it. I was doing very well on UBNT until it started to get beaten up by the Russian trade embargo and the higher dollar. I still think it's a good company, so I sold half. I will probably sell half of the GILD in my IRA ahead of earnings and put in some buy orders well below the close in the event that it sells off. ( I have plenty of it in my taxable accounts where the cost basis is too low to let me sell the stock without paying a lot of taxes.) It's been demonstrated to my satisfaction that you have to own 30 - 40 stocks in your portfolio in order to mitigate the risk of a few falling stocks doing serious damage. I also have a rule that whenever the Dow goes up by more than 150 points, I sell something ... usually something that is not performing well. And whenever the Dow goes down by more than 150 points, I buy something.
Incidentally, your strategy for this stock seems counterintuitive: You have essentially bet the farm on a big post earnings rally. However, you say that if it sells off on earnings, you will buy more. Let's assume that it stays around 110 ahead of earnings. I would sell half of your 10,000 shares and put in buy orders for 500 shares at 108.70, 108.20, 107.80, 107.40, etc. However, I still think you're putting too many eggs in this one basket.
Excellent advice. I will restrain myself.
Having had two friends who died from CLL, I will wager that a single death among a patient population which currently records about 4,600 deaths a year in the US alone would not deter them from taking this lifesaving drug.
Nonsense. This stuff, if it was even approved, is no more effective than interferon, which is essentially disappearing from the market. By the time another effective HepC medication makes it to market (1) Gilead will have skimmed the cream off the market. (2) Gilead will have introduced even more effective combo therapies for the other HepC genotypes.
Tomorrow we will know Sovaldi sales for the previous week, and they will almost certainly be down. This will discourage the short term trader and encourage the long term investor, since the more Sovaldi sales are depressed, the more dramatically Harvoni sales will surge.
Only peripherally, in my opinion. Retail traders like to trade the cheap biotechs. The only way they can play this one is through the options. The large holders, I think, love to hold it in a range where they can sell both puts and calls to enhance their returns. Right now, they will sell you the Nov 110 calls for about three bucks. The likelihood is that it will close around that price on Nov. 22 when the options expire. Whereupon the retail traders will cry "Manipulation!", oblivious to the fact that they themselves are the ones who are holding the stock price down.
Although GILD is a bellwether for the biotech category, it seems to disappoint traders with its relative lack of volatility. While CELG, AMGN, REGN, etc. all charged ahead with the rallying market today, GILD could barely make a 1% gain. This is, I think, because everyone knows where this stock is going: The earnings will not be a blowout, simply because Sovaldi sales are falling as patients are warehoused to await Harvoni. The institutional holders will sit on their hards and wait for the disappointed retail investors to drive it down. No doubt some hedge funds are also actively shorting it here. Then, as Harvoni sales are reported, they will buy it back or cover. The huge wall of Nov110 calls will effectively hold it there until expiration, I think, after which it will start another leg up.
I think this will run up a bit in advance of earnings, fall back on earnings as the retail investors are disappointed by the predictable falloff in Sovaldi revenues, then resume its climb as the Harvoni numbers come in. However, I think that huge wall of Nov110 call options will be hard to breach at expiration. If it goes above 110 in advance of expiration, I might lighten up a bit in my IRA. Happily, even though this is my largest position, I can't sell it out of my taxable accounts without paying a lot of income taxes.
Cramer, who I really think is mentally unstable, was cheerleading the Ebola hysteria. According to him, it was unsafe not just to buy the airlines and cruise lines, but stocks in general while Ebola was an issue. As is often the case, you can make a lot of money trading against his recommendations.
The doughty colonel's only post ever encouraging panic and retreat? Perhaps, under another id, he is barricaded behind a wall of worthless puts.
With all due respect to the chartists here, I think that this is simply a case where the hedge funds are going to have to pick a few stocks to run up to the end of the year in order to make up for their failures. GILD is, perhaps, the likeliest candidate. FB might be another. (I have only a small position in the latter, but I could be persuaded to jump in.) Aside from the day when they report earnings, when they will be waiting for the retail investors to sell, they will pack their portfolios with this one.
Correction that was 68.50. Now someone is offering 1,000 shares @ 67.95. If there were any real shorts here, like in the old days, someone would be grabbing at them. I expect this will work its way up over 70 in the coming days and stay there.
The 70 calls would have been a better choice. I was hoping for some more specific news about the uptake of tedizolid (Sivextro), but the strong cubicin numbers are obviously enough to turn this around. The ask is currently 69.50.