Catastrophic Success
December 20, 2011
New readers to my musings often find it interesting, when they meet me in person, to find me quite an optimistic person, given the nature of my current predictions about the economy. And regarding the short term, defined as less than five years, my writing is admittedly less than sanguine. We do have some problems that are not easily dealt with. And even longer-term, those of a bearish natural disposition can find reasons a-plenty to tone it down.
But five years (at least at my age) is not all that long. One way or another we will get through the current mess. My studies on the nature of progress in a number of fields give me a rather optimistic longer-term slant on life, and most especially in biotechnology. Long-time readers know of my interest in the potential for biotechnology to be completely transformational and disruptive (in a positive way) to society. It is one of the few places I am "long" and willing to get even more long.
Today's Outside the Box is from a source that is no stranger to my regular readers. Pat Cox called last week and told me about an amazing announcement that was made public last Friday, so we are almost "breaking news" here this week. BioTime (BTX) has announced the ability to detect most cancers with a simple blood test that detects markers. This holds the prospect that within a very few years we will all routinely get a blood test for cancer as part of our regular blood work, allowing for very early detection. And as Pat notes, cancer becomes far more treatable if detected early.
As Pat and I talked, I asked him to give us an update on the BioTime story but also on the state of some of the really promising cancer cures. And let me note, these are but a few. There are literally dozens, if not hundreds, of real potential cures. We do live in remarkable times. Comments in the text below in brackets [ ] are mine.
Pat is one of my favorite sources for new, transformational technology. We talk regularly and compare notes. Pat (like me) likes to look over the horizon and think about what is coming. The companies he writes about are typically early-stage research and development plays, in a variety of fields (not just biotech – last month he was writing about robotics!).
You can subscribe to his letter by going to http://www.PatCoxLetter. Warning: his publisher likes rather aggressive marketing, but I just like his letter and research.
Note: I have invested (for quite some time now) in some of the companies he mentions below or have associations with them that I note in the copy. And some I have no knowledge of.) I have not done any transactions in the last few months and will not do anything for at least two weeks. And do NOT chase these stocks. They are typically very small-cap with smaller volumes, and are research and development companies with no guarantees of success. Do your homework, and if you buy then do it for the long term.
I do comment below on one private firm that some of you who sit on foundations and charities that focus on cancer and heath care might want to look into.
Now let's take a look at what Pat and I sincerely hope is the future.
Your planning to live a lot longer than you think analyst,
Biotech and the Unintended Consequences of Moore’s Law
June 13, 2011
Today we turn away from Europe and QE2 and talk about something I find far more interesting, if not as immediate. I have been talking and emailing with Pat Cox of Breakthrough Technology Alerts a lot lately. There is just so much happening in the biotech space and, as long-time readers know, that is my hobby and the one place I actually buy stocks in this market.
There is just so much misinformation (and sometimes borderline lies by short-sellers). I asked Pat to give us an update on the state of the stem-cell world, and in typical Pat fashion he gives us a lot more to think about. Indeed, Moore’s Law is changing more than just computers.
Now, the only way to really do this right is to actually mention a few specific stocks. Please note a few things. These are very small, highly speculative stocks. I own some of them and will likely buy more in the future. But I fully expect that when we have a bear market these stocks could trade down. I am buying these for a very long hold, in hopes their technologies actually prove out. There are no guarantees. I can almost guarantee that some of them will go to zero, for all sorts of reasons (like a new competitor coming out of left field – things change so fast, as Pat points out). I say that in order to tell you NOT to pile into these or chase the price. Please. These are not value stocks. Most burn through money. You are buying into intellectual property and management, not today’s cash flow, and there is no need to do it today. Spend some time. Learn the stories and the industry. Get a strategy that works for you. Diversify. Etc. Some are my personal investments, and this is not a recommendation. You should always consult your financial advisors.
Pat’s letter is rather pricey ($2,000), so my deal with Agora is that I have to offer a link to their letter promo. As I have noted, not my style of promotion, but I am a HUGE fan of Pat Cox. If you are at all interested in new technology and biotech, he is my go-to guy. And he is a great place to start your education and read his back issues and ponder the world to come. For the next two weeks, my readers get a reduced price of $895. The link is:
http://agorafinancial.com/reports/VPI/laststock/VPI_laststock_051811_vp_m1.php?code=LVPIM600
Now, let’s think about just one of the reasons life is going to change so much over the next ten years.
Your sitting under the Tuscan sun analyst,
Want a New Cardiovascular System?
March 1, 2011
This week’s Outside the Box is again a little unusual. Some of you will think, “There goes Mauldin again, dreaming of a brave new world of biotech.” Except this time the brave new world is here. My friend Pat Cox of Breakthrough Technology Alert has written a piece for me on what he and I think is potentially one of the most important scientific breakthroughs of the last few decades. Normally I don’t mention specific companies, but in this case we can’t talk about the breakthrough without mentioning the company. Disclosure: I own a small number of shares I bought over a year ago. This is one of a number of companies I am buying as part of my biotech holdings for the very long term. This is not investment advice and you should not replicate my holdings as each individual situation is very different. Always consult your investment professional and read all disclosures below.
Second, Pat gave what I thought was one of the better speeches I have heard in years last summer in Vancouver, and it is still relevant today. It is also one of the best and funniest PowerPoint presentations I have even seen. I was in awe with the creativity. It is about Schumpeter, creative destruction, and why the future is going to be full of dramatic changes. I really urge you to take the 35 minutes or so and listen to the speech and watch the PowerPoint. This is something that will really give you an education. Here's the link. It is on my website. If you are not a member, you will have to enter your email address.
Now, I know the sales promotion is over the top, typical of investment letters, and not my style at all; it is just what investment newsletter publishers do. But that does not take away from my respect for Pat and the quality of his work. He is one of my real “go to” guys for biotech and all new technology.
As part of the agreement with Pat’s publisher to allow me to use this piece, I offer this link to a way to subscribe to his letter. If you want to subscribe to Pat’s newsletter you can click on this link and get a significant discount (over 50%), for my readers only, available through March 15. I consider Pat one of the really must-read writers on new technology. His record speaks for itself. And the promo has an old date in it they couldn’t change – the real date is March 15.
Your hoping to live a lot longer analyst,
Complimentary Investment Presentation by Patrick Cox
February 28, 2011
Here is the free speech I mentioned by my very good friend Pat Cox. I hope you enjoy it as much as I did. And if you want to subscribe to his letter at over 55% off (just for my readers through March 15) click on the link below the presentation.
Now, I know the sales promotion in Part Two is over the top, typical of investment letters, and not my style at all; it is just what investment newsletter publishers do. But that does not take away from my respect for Pat and the quality of his work. He is one of my real “go to” guys for biotech and all new technology.
Now, sit back and prepare to be entertained while you learn.
The Ultimate Hedge in Economic Crisis
June 2, 2010
This week we have a really counter-intuitive Outside the Box. I was talking with the editor of Breakthrough Technology Alert, Patrick Cox about health care costs and he made some very interesting observations from new research about health care. It seems healthy people pay more for health care than sick people. I asked him to do a write-up for us. Despite the new health care bill that passed, health care costs are going to go up, not down. And that's a good thing, as Pat explains. You really want to read this.
Some of you may not be aware that a few months ago I wrote that I was buying stocks for the first time in 12 years, and specifically smaller, transformational biotech stocks. As I wrote at the time, I think that we could see a real bubble in biotech in the latter part of this decade, and just once, please God, I want to be at the beginning of a bubble.
Pat is one (and maybe the best) of my "go-to" sources for investment ideas in the biotech space. I have been very pleased with the results of his favorite plays in the last few months. And I am glad that some of my favorite companies have seen their prices come back somewhat in the last month or so, as I plan to be buying them for a long time.
Which brings up a problem and an opportunity. Pat's letter is just getting too big circulation wise for the typically smaller companies he finds and writes about. His publishers (Agora) decided last week to basically double the price (and it is not cheap to begin with!) to reduce the number of subscribers. They did a "final promotion" at the old price with a deadline of last week. I just saw that. I asked them to extend that offer for one week to my readers and they agreed.
So for the next week, you can subscribe at a discounted $699 before it goes to double that. Below is a link to the promotional site for the letter. And yes, I know it is very "hypey." I don't like that type of copy, but that is what sells and Agora is in the business of selling letters. My business is to find you good sources and to write about them. In terms of return on investment, this subscription has been a very good one for me. Find out more here.
If you did not get to read his first Outside the Box on the biotech space (and you really should!), and my rationale on why I think there will be a bubble in biotech, you can read that at this link. http://www.johnmauldin.com/outsidethebox/the-coming-biotech-bubble-4391
And without further ado, let's find out why health care costs are going up and why it's a good thing.
Your admittedly a biotech junkie analyst,
The Coming BioTech Bubble
January 11, 2010
In last Friday's letter, I said that I had not bought any single stocks in the last decade, preferring funds and managers, and in general I still do. However, I am now going to start buying a specific asset class this month and currently plan to add to those holdings at least every quarter for several years. This is the high risk portion of my portfolio, so it will not be all that large a percentage. (Do not write and ask me what the right percentage is. It will be different for everybody. For some of you the answer will be none, as you need to be taking very little risk. Consult your investment professionals.).
Let me state emphatically that I am not going to become a stock picker. My regular letter will remain focused on the macro economic environment and investments in general. This is not my recommended advice to you but what I am doing as an individual investor. I simply know that many readers are interested in what I am doing personally and in my investment ideas. If this doesn't make sense to you, then by all means hit the delete button later. With that thought, let's dive right in.
In the 70s, we had a bubble in gold and commodity stocks. Some stocks had huge run-ups because of major gold finds coupled with the price of gold going up over 20 times over the period. A gold mine became a hole in the ground with four promoters standing around it telling you a story about why there was gold in the hole. Sometimes there was, but often the "gold" was the stock the promoters sold. I was too young and poor for that bubble, although I did get into a few (sadly too few) later winners.
Then we had the tech bubble. And the internet craze. Obviously, some of those stocks are still around and have been longer term winners, but the number of stocks that went public with crazy offerings, no revenues and valuations from left field eclipsed anything I have ever witnessed. I missed that bubble as well, as I was bearish about the markets in general and tech in particular, as I wrote in my first book (1998).
I think there is a potential for another bubble over the next decade. There will probably be several, but there is one I am particularly interested in and that is biotech, with an emphasis on stem cell and gene therapy and their allied kin. For reasons outlined by my friend Patrick Cox, writer of the newsletter Breakthrough Technology Alert, in today's Outside the Box, I think we are on the cusp of a decade of remarkable breakthroughs which will change the way we do medicine.
While some of these breakthroughs will come via large firms, others will be in smaller companies. Imagine cures for certain types of cancer. Rejuvenation of failing hearts? Livers? Genetic therapies for all types of diseases? The list of potential blockbuster therapies from current research is enormous and growing.
There are going to be some companies which will simply see their stocks explode. Of course, for everyone that has a large run, there will be failures which will go to zero. Or companies that seemingly have "the cure" only to have another company come along with something faster and cheaper, wrecking their share values. (Think of the dawn of the computer age and how many once high flying stocks went to zero. Biotech stocks are not bonds.)
But I think (personal belief here) that what will capture the imagination will be the large winners. Everyone will want to be in at the beginning of a new home run. As the decade goes along, we will see companies go public before they are really ready, just because they have a great story and people will want to fund that story.
It has the classic potential to become a bubble, because there is a deep reality - some substance to the stories of the winners - that will make people look for the next big winner. So far, we as humans have not proven ourselves able to resist bubbles. Maybe this will be the time we all become adults and there will be no bubble. Maybe. But my thought is that it will not be.
And as I have been ending my speeches recently, I have lived through a number of bubbles. I have never gotten to invest in one. This time, dear God, just once please let me be at the beginning of a bubble.
Now, I have no particular expertise in biotech stocks. I go to conferences, read articles and hear amazing stories. They all sound good to me. But for about a year I have been reading Patrick's newsletter, and have spent a lot of time talking with him (and others in the biotech industry). He does have expertise in looking at all types of breakthrough technologies (and not just biotech). He is one of my main sources for ideas in this space, and if you are interested in the tech and biotech world, you might consider subscribing to his letter (I will provide a link later). As an aside, he will be writing the chapter on biotech in my next book.
Starting this month, I will begin to buy some of the stocks in his suggested portfolio. I will start with four stocks and add to those positions and other stocks over the coming years. I think this is a long term play. My best guess is that the coming recession I predicted last Friday may hurt the value of these stocks, but I simply don't know. This is not a trade, nor will I be hedging (at least not for some time). I expect to be adding small positions for years.
Do not write and ask me which stocks I will buy. For lots of reasons, I won't do that, not least of which it is not fair to Patrick for me to use his intellectual work. I am building a portfolio, and I can almost guarantee you that some of those stocks will end up being dogs. Second, Patrick is not going to mention any specific stocks in this week's letter. It would not be fair to his smaller subscriber base to mention a stock to 1 million readers. Third, if you do subscribe and after some time reading and researching on your own, decide to buy a stock or two, do not chase the price. And I would suggest you do not buy all you intend to buy all at once. Space it out over time. These stocks can be very volatile and it is probably better to average in over time.
There are some other letters and analysts that I am going to introduce you to over time. There is no need to rush. Also, if you know of another writer I should be aware of, feel free to drop me a note with their name. Now, if after you read this week's Outside the Box you are interested in subscribing to Patrick's letter, you can do so here. The writing on the web site is fairly typical in it's over the top promotional style, but see through that to his actual work. And they are knocking off $300 off the regular price of $895 for my readers. I am a big fan of Patrick, and admire his thoroughness and work. If you want to invest in this sector, starting off with Patrick is a good way to go. Take your time, read, learn and then invest. Again, no hurry here. But do get started researching.
A couple of caveats. I may be completely wrong about there being a potential bubble in biotechs. Just because there may be similarities to previous bubbles does not mean there will be another. Past performance is not indicative of future results, as I say time and time again. Second, stocks you buy in the near future may really get hit in the next recession. You might consider waiting if that will make a big difference to you. Like I said, there is no rush. Consult with your investment professionals about this, and do not take large positions relative to your total portfolio. A stock that I could be convinced about today can be made obsolete by newer technology. Cautious optimism is always proper, with the emphasis on caution.
Finally, and as a reminder, this is a market and sector call by me. I have no idea on who the real winners will be in ten years, although I hope I get lucky and find a few. And for those of you who don't have enough money (yet) to buy into this concept but still like the idea, consider a small cap biotech mutual fund as a way to start. There are several.
Now, let's see what Patrick has to say about the coming new world of biotech.