An analysis of my current positions

Investment Analysis Clubs Saul’s Investing Discussions
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Back to the cost/benefit. It’s a bit like saying Tesla’s price for the Model S is immoral - who can afford to pay $90,000 for a car? But the fact of the matter is that viewed over a number of years, the Model S is quite a good deal.

John, it’s nothing like a Tesla. There’s nothing immoral about charging a lot for a Tesla. It’s a matter of choice if you want to spend a lot on an extravagance or not. On the other hand I was talking about a medication which some people need to stay alive or stay healthy.

I don’t care how much they charge for a Tesla, people can choose to buy one or not. But a medication is something different. Just my way of looking at it.

Saul

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I think this started when I mentioned that CELG was one of my big four positions and it got compared to GILD. By coincidence, CELG is up $4 this morning on good study results.

Saul

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By coincidence, CELG is up $4 this morning on good study results.

Saul

Saul, I think your portfolio is the beneficiary of more “coincidences” than anything I have ever heard of. You even out-coincidence that whole Kennedy-Lincoln thing.

Jeb
Watching from the weeds

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If a drug gives you several extra years of life, not only years but quality years of feeling good,is nearly always effective and has far fewer side effects and risks than other drugs, it is a bargain at $100,000. Because of the medical expenses associated with the very common side effects of most other therapies they often wind up costing $100,000 too.

As I’ve gotten older, maybe a bit wiser, or maybe not, I’ve started rejecting relative morality. Such as Mr. X isn’t as bad as Mr. Y, because Mr. X only robbed a bank, while Mr. Y, killed 4 people. Both are bad, ranking not necessary.

When considering the range of behavior, the area of acceptable behavior has grown, the area of bad has shrunk, and the grey area is disappearing. The morality of pricing stands on its own, irrespective of the price of alternatives.

Practically, the price is one factor of many when an individual considers their alternatives.

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On the other hand I was talking about a medication which some people need to stay alive or stay healthy.

Getting cured is not a human right. Protecting (legitimate) human rights is both moral and fair but applying the same to feel good situations is neither moral nor fair, it’s a choice people make.

In poor societies only the bare minimum rights are respected. For example, in poor nomad tribes the sick and the elderly are left behind to die because they cannot afford to care for them. As societies become more affluent they create new rights such as the right to privacy, copyright, and now, it seems, the right to cheap drugs. If the drugs fell from heaven like manna it might make sense but drugs are created by people who invest time and money to do so. Forcing them to give away their work is slavery.

How many lifesaving drugs have they created in North Korea lately? Or in France for that matter?

If you want to save people who require expensive drugs, buy it for them. But don’t make the rest of us buy it for them. How is that fair or moral? It the old issue of what is seen and what is not seen: Sebastian Bastiat (1801-1850)

What Is Seen and What Is Not Seen**1
1.1
In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

http://www.econlib.org/library/Bastiat/basEss1.html

Denny Schlesinger

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Politics is a can of worms on this board.

Better off talking basketball.

Robert

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By coincidence, CELG is up $4 this morning on good study results. Saul

Saul, I think your portfolio is the beneficiary of more “coincidences” than anything I have ever heard of. You even out-coincidence that whole Kennedy-Lincoln thing. Jeb

thanks Jeb, but remember, my stocks don’t always work out. Look at PFIE today (admittedly a smaller position).

Saul

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With its FDA approval for psoriatic arthritis, Celgene’s ($CELG) Otezla (apremilast) comes into a market dominated by some of the best-selling drugs in the world, including AbbVie’s ($ABBV) top seller Humira and Enbrel from Amgen ($AMGN) and Pfizer ($PFE). But instead of an injection, Celgene’s drug is a pill, an advantage the company thinks will help it eventually reach up to $2 billion in sales–a figure analysts feel less certain about.

“Patients and physicians have expressed their desire for a safe and effective therapy for psoriatic arthritis that has the potential to simplify patient management,” Scott Smith, who heads Celgene’s inflammation unit, said in a statement.

According to ISI Group analyst Mark Schoenebaum, Celgene has tagged the drug with a wholesale price of $22,500, which he says is about a 30% discount to Humira and Enbrel but higher than he expected. That presents a chance for some unexpected upside to its sales numbers.

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Hi Saul,

Allow me to save you a few dollars. No need to pony up for Nasonex in the US anymore. Similar nasal steroid now available OTC:

http://www.walmart.com/ip/Nasacort-Allergy-24-HR-Multi-Sympt…

-Brandon

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Hi Saul,

I like your strong conviction stocks…

I am still dealing with price anchoring issues…I own BOFI and SKWS, and want to increase my positions, but can’t pull the trigger…I know I should focus on the current future of the companies, rather than looking at the past performance of the stock price,

I guess my question to you is that you were starting a portfolio today, would you allocate the same amount to your top conviction stocks or would you initiate a smaller position and let it grow?

I keep having regrets that I missed out on the huge gains on many stocks, which I know is foolish to do…

Another thing I noticed, is that you don’t have any large cap stocks…My portfolio is full of large cap stocks such as AAPL, AMZN, MA, SBUX…I wonder if i should reduce my positions and focus on more mid/small cap stocks…

Saul, if you were 36 years old today, would you invest differently than you do now?

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I am still dealing with price anchoring issues…I own BOFI and SKWS, and want to increase my positions, but can’t pull the trigger…I know I should focus on the current future of the companies, rather than looking at the past performance of the stock price

Hi Darrell, Treat the companies as if you had just encountered them, and then decide, based on their current earnings growth, PE ratio, prospects, price, etc, would you buy them now. what they did in the past is irrelevant. Price anchoring is a BIG mistake.

I guess my question to you is that you were starting a portfolio today, would you allocate the same amount to your top conviction stocks or would you initiate a smaller position and let it grow?

I never start with an oversized position. I start with a medium or average size position and let them grow. Sometimes, I start with a small position and add to it while it’s growing.

I keep having regrets that I missed out on the huge gains on many stocks, which I know is foolish to do…

You are right. The market doesn’t have an upper limit to which it grows and then stops. There are always new young companies that come along and grow quickly.

Another thing I noticed, is that you don’t have any large cap stocks…My portfolio is full of large cap stocks such as AAPL, AMZN, MA, SBUX…I wonder if I should reduce my positions and focus on more mid/small cap stocks…Saul, if you were 36 years old today, would you invest differently than you do now?

If I was 36, I wouldn’t invest differently than I do now, I’d invest differently than YOU do now. You are investing like an old man with very large caps. If I was you I’d invest in more mid to small caps.

Best

Saul

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