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XMFHelical (< 20)

Bye Bye BioZZF



October 15, 2007 – Comments (1)

Today I closed out BioZZF.

[actually will close out tomorrow on market open]. 

This is an avatar I used to track a stock picking contest I moderated on the Biotechnology board and which ended today. 

I won with picks in Cepheid and inVentiv Health (only the latter of which I actually own).

But how did BioZZF do?  Pretty abominably.  The avatar for the contest had a CAPS score of 0.56 finishing 37243 out of 37479.

Score: -411.32 - Accuracy: 28.57%

This 'player' was often in the bottom 20 in CAPS during the coarse of the year.

There were many good picks.  Cepheid, Isis, and Cytrx all posted better than 100% gains.  Strong performance was seen in BioMarin, Elan, inVentiv and Lifecell as well.

But...biotech is biotech and there is always a deathcry or two to be found in contests like this.  This year we had massive failures from Telik, Northfield, Atherogenics, and most recently Cortex Pharmaceutical.  Severe underperformance from Necktar, Sunesis, and Acusphere was also apparent.

Now, the BioZZF CAPS port wasn't a full representation of the contest. There were both bullish and bearish picks on Telik (the bear was right in this case but BioZZF only recorded the bull), also some foreign and one small cap pick weren't CAPS eligible (Renovo, Biota, Pytopharm, and Curis). 

Still, in my opinion there is a lesson to be gleaned from BioZZF (so gather round children).  A short contest like this biotechnology one is often won by swinging for the fences i.e. by selecting companies that will have make or break news in the coming year.  But... portfolios built on a large number of very risky picks are likely doomed to failure.  There will be some big winners, but the big losers will likely drown them out.  And while you may well know one industry better than another, such as the one in which you work, don't put all your eggs in that basket (all lessons mush contain cliche's).  Industries fall in and out of favor, and this year wasn't great for biotech as evidenced by most of the biotech ETFs trailing the S&P.  Comparing this approach to an industry diversified investment like SPY (as CAPS does) is pretty telling, and should be more so year over year.

Contest are fun - even ones with no prizes (like CAPS).  I may have won this year, but finished pretty poorly in the prior years contest. Real investing should be taken more seriously.


Also feeling guilty here for losing all-star status just hours after getting my avatar. The perils of a sector specific CAPS port perhaps?

1 Comments – Post Your Own

#1) On October 15, 2007 at 8:01 PM, TranGanZen (33.98) wrote:

In a way I am thankfull for loosing so poorly here on CAPS. I am loosing because I am playing with ideas that I did not want to risk with real money. I win some times, I loose some times, but I am learning. Play with fantasy stock markets, but be more serious with real money.



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