FYI: Copy & Paste 7/4/14: Amy Feldnan: Barron's:
I will ask some same question that I have several times in the past, do you own a health care fund ? If you don't you should.
Regards,
Ted
It has been 11 years since the human genome was first mapped, at a cost of $2.7 billion. Since then, the cost of DNA sequencing has dropped to about $1,000, and our understanding of the nature of disease has expanded exponentially. This has created a land rush for biotechnology companies, which use living organisms to develop medical treatments. For the past three years, biotech stocks have risen spectacularly, though this year things have been bumpier.
Eddie Yoon, manager of the $6.3 billion Fidelity Select Health Care Portfolio (ticker: FSPHX) and leader of Fidelity's 12-person health team, compares the innovations in biotech -- and the new companies being created -- to the explosion in technology and digital businesses that happened after Netscape's 1995 initial public offering. "The price point of sequencing the human genome has fallen so fast, and the early-stage pipeline for biotech is exploding right now," Yoon says. "That's what is driving innovation.
There are many ways to invest in that innovation, and the pros take very different views in terms of assessing value and risk. New drugs are altering the way we live, and areas like immuno-oncology hold enormous promise, but getting drugs to market is expensive, time-consuming, and far from a sure thing. With risks high, and valuations no longer cheap, minefields abound.
The best of the health-care funds (and funds with large stakes in health care) all have investments in biotech, but their strategies differ. At one end of the spectrum, Vanguard Health Care (VGHCX), the granddaddy of health funds with $37.7 billion in assets, takes a more conservative approach: It has just 12% in biotech -- a smidge less than the MSCI ACWI health-care index -- while its No. 1 holding is Merck (MRK), the global drug company with a strong pipeline. The fund rarely leads during market rallies, though it suffers less on the downside.
By contrast, the $2 billion Janus Global Life Sciences (JFNAX) has 32% in biotech, including three of its top five holdings: Gilead Sciences (GILD), a leader in HIV drugs, which has recently launched the hepatitis C blockbuster Sovaldi; Celgene (CELG), whose flagship product, Revlimid, fights blood cancers; and Biogen Idec (BIIB), which specializes in drugs for neurological disorders, autoimmune disorders, and hemophilia. Says Janus Global Life Sciences' manager Andy Acker: "We've seen an acceleration of innovation. More drugs are getting approved more rapidly at lower cost." In fact, he adds, since 1999, biotech-drug sales have soared from $5 billion to more than $100 billion, and the number of blockbuster biotech drugs has risen tenfold, from three to more than 30, a level of innovation that he expects will continue.
Matt Kamm, lead health analyst at Artisan and co-manager of the $1.1 billion Artisan Global Opportunities (ARTRX), which has 19% of its assets in health care, sees similar opportunities. He points to Regeneron Pharmaceuticals (REGN), whose drug Eylea treats macular degeneration, and which is the fund's No. 3 holding. As the lines blur between biotech and big pharma, Regeneron has set up a partnership with Sanofi (SAN.France), the Paris-based drug giant, also a holding. "It has allowed Regeneron to act like it has a giant balance sheet and build a pipeline, and it gives Sanofi growth and products for the future," Kamm says. In addition to Eylea, Regeneron (which trades at 26 times next year's earnings) has three drugs in Phase 2 and 3 trials, for cholesterol, rheumatoid arthritis, and atopic dermatitis, and another 11 in development. That diversified drug pipeline appeals to Kamm: "This is a risky business, even for the best companies, so it's important that companies make good, risk-adjusted decisions about research-and-development spending and have multiple shots on goal."
For similar reasons, Kamm likes Biogen Idec, which trades at 23 times next year's earnings. It has a new oral medication for multiple sclerosis, Tecfidera; a new product launching for hemophilia; and other treatments in the pipeline for MS, spinal muscular atrophy, and Alzheimer's -- all squarely part of the firm's focus on neurological disorders. "They're all high-risk as stand-alone opportunities," Kamm says. "But we think it's a broad enough pipeline."
WHAT OF THE WAVE of biotech IPOs earlier this year? Those are riskier. Janus' Acker, who invests in small-company biotech, keeps the holdings to small pieces of the portfolio. "Some of these are pretty early stage," he says. "We saw some frothiness in the market." Artisan's Kamm is steering clear completely. "They're coin tosses or lottery tickets," he says.
The Best Defense Is a Good Offense
With health-care funds returning 37% in the past year, the sector's no longer a defensive strategy. Below are five good options.
Assets Total Return*
Fund/Ticker Manager (bil) 1-Year 5-Year Top 3 Holdings**
Fidelity Select Health Care Portfolio/FSPHX Eddie Yoon $6.3 50.3% 27.6% Actavis, Biogen Idec, McKesson
Janus Global Life Sciences/JFNAX Andy Acker 2.0 45.0 25.7 Gilead Sciences, Aetna, Celgene
Prudential Jennison Health Sciences/PHLAX David Chan 2.5 36.6 28.4 Alexion, Biomarin, Vertex
T. Rowe Price Health Sciences/PRHSX Taymour Tamaddon 9.1 39.8 29.1 Aetna, Agilent Tech, Alexion
Vanguard Health Care/VGHCX Jean Hynes 37.7 37.9 22.4 Merck, UnitedHealth, Forest Labs
*Returns are annualized as of 07/02
**As of 05/31 Sources: Morningstar; fund companies
Fidelity's Yoon trimmed his fund's exposure to small biotech stocks early this year when he saw stretched valuations and decreasing quality. His fund now tilts its biotech holdings toward larger companies with stable free cash flows and encouraging pipelines. Plus, he has been diversifying holdings to areas such as medical devices, specialty pharmaceuticals, and life sciences. Where Gilead was once Fidelity Select Health Care's top holding, for instance, now it's Actavis (ACT), a global drug company with a huge business in generics. It may not be a sexy business, but Yoon argues that its global footprint in more than 100 countries, and its ability to leverage its sales force across multiple categories, gives it advantages. The shares, recently at $222, trade at 13 times next year's earnings estimates. "They are an innovator; they are a consolidator; and they are accessing the global market," Yoon says.
Regardless of the broader economy, Yoon argues, the rising demands of an aging population and an emerging middle class worldwide will continue to drive health care. "Just because the health-care space is up a lot," he says, "doesn't mean there aren't a lot of good opportunities in this business."

reply rjb112: I used yahoo finance. Average of equal amount invested in each fund, app.5.46 % combined return. Investment $1000 = $ 54.60 return. I see catch 22 came up with a different figure , 6.17 % .

@Derf: can you describe exactly what you did on Yahoo Finance to come up with those figures? What data did you enter in what part of Yahoo Finance, etc?
Thanks

I tried viewing it "incognido" (in both Chrome and IE), but WSJ still wouldn't show it!!

But it's OK. The one time it did let me in was enough. Surprised I even got in that one time.

@catch22: Thanks, that site seems good enough to work with. How did you get 6.17%? I chose the six-month period through 7/3 and switched to the bar graph. It showed 9.25%, 3.13%, and 8.99% for the three ETFs. Using my calculator and a hypothetical $100K with 33.33% in each, I got $3,083.33, $1,043.33, and $2,996.67 for a total of $7,123.33 or a gain of 7.12%. I probably overlooked something that you did. I understand "total return" means the distributions were reinvested.
Thanks for all your help!
Rick

reply rjb112: I used yahoo finance. Average of equal amount invested in each fund, app.5.46 % combined return. Investment $1000 = $ 54.60 return. I see catch 22 came up with a different figure , 6.17 % .

On the Wall Street Journal articles: try Googling the article title. Often the Google link works fine but my attempt to republish the link fails miserably.
David

Yeah, I always use that 'technique'......googling the article's title, and it usually works. Sometimes I have to try several different links from google.
This time was odd: I tried to access the article several times by using a google link, and was blocked each time. Just now I tried the same exact google link and was successful. Got in.
Here's the link that got me in.
http://online.wsj.com/articles/mutual-fund-king-bill-miller-makes-comeback-1404095931
However, I just tried this link again as an experiment....and it blocks me again!

By squinting carefully, a writer for the WSJ was able to conclude that Bill Miller's Legg Mason Value Trust had the best performance of any fund for the 15 years before the market's crash and the fund's ultra-crash. The fund flopped around like a fish tossed on the pier, investors left, Miller left, and the fund was rechristened. Now, because Miller is more talented and sees more deeply than any other, his Legg Mason Opportunity fund has the best record of any comparable fund over the past several years. That's the story told in "Mutual-Fund King Bill Miller Makes a Comeback." (Note: not my hyphen.)
David

I don't have access to this WSJ article using the above link.
Does someone have another link? Or can someone copy/paste?

VTI,VXUS,BND returned App. 5.461% with equal amounts invested , ending 30/th June.
Have a nice wked, Derf

@Derf, appreciate if you will provide your sources and methods for coming up with this.

VTI,VXUS,BND returned App. 5.461% with equal amounts invested , ending 30/th June.
Have a nice wked, Derf

Unless there's a transaction fee, as at Fido. Over time of course it's worth it to pay the $50 xaction fee because the ER is much lower, same as with YACKX vs YAFFX.

At Fido DSENX is the usual $2500 for anyone / any account, and NTF.

I am sorry, I just realized @davidrmoran has posted some of these links. Try the last one. It has the link to the webcasts. DSENX and DSEEX are the same fund. DSEEX is cheaper, but is institutional and requires a $100,000 initial buy. You can buy it in a Roth IRA for $5000. The transaction fee is $20 at Vanguard.

exp --- gah, I quail when asked for advice, since I mooch here so much and lack confidence financially despite having done okay over the decades (with huge exceptions).
Anyway, I say yes, absolutely, as I have done, because DSENX since last fall has outperformed the PLUS stuff significantly (meaning enough, meaning nontrivial) and indeed outperformed everything else conservative I own. I may, if I have nerve, go 50-50 with them and RGHVX, as I wrote earlier, with large moneys. But I do not have nerve just yet. I have put a lot into DSENX already, yes, so this is not just theoretical.

"What's so weird about that. Its BBP"
I have no idea what BBP means. Anyone know?
Regarding FLVCX, M* obviously likes it. They have given it a Silver analyst rating, and say:
"An outstanding fund--for those who can use it well"
I just plotted the return using the M* tool. Better wear your seat belt during a bear market. Looks like from 5/31/2008 thru 3/9/2009, the fund fell 69.4%. The fund tends to give significantly outsized positive returns on the way up.....and significantly outsized negative returns on the way down.
Some comments from M*: "while investors able to withstand the fund's performance gyrations have been well compensated for its risks, many haven't had the stomach for it. An annualized gain of 11.7% in the trailing 10 years through October 2013 ranks in the second percentile of all domestic-equity funds, irrespective of category. Morningstar estimates, however, that the typical investor here has earned just 4.5% per annum--the result of ill-timed purchases and redemptions."
"Despite those disappointing results, there is much to admire here. Long-term performance has been not only stellar, but consistently so, with the fund's three- and 10-year trailing returns placing in the category's top decile and its five-year figure ranking in the top quintile."

@bee, this is as good a time as any to "try out" the information you shared about how to embed something using Jing. If the graphic image appears, then "it worked"!
@bee/@TheShadow: looks like QQQ has a sig. lower expense ratio than USNQX, 0.20% for QQQ and 0.64% for USNQX. I take it this is the primary reason that QQQ has slightly outperformed USNQX. Below are the performance figures from M*, using screenshots from Jing, which by the way is an awesome free tool to have!

Related Story and Chart:
Alarming Sign in NDX Stocks’ Drawdown
"The Nasdaq 100 Index is making new multi-year highs, levels not seen since the weeks just after the 2000 Internet Bubble top. But it is interesting for us to see that the average component stock in that index is down 7% from its trailing 52-week high."
mcoscillator.com/learning_center/weekly_chart/alarming_sign_in_ndx_stocks_drawdown/
I am getting exposure to the sector using USNQX
Thanks for the post Ted.

FYI: After a bubble-fueled rally of 138% from the start of 1999 to March 2000, the Nasdaq Composite proceeded to fall 79% from a high of 5,132 on 3/10/00 to a low of 1,108 on October 10th, 2002.
Regards,
Ted
http://www.bespokeinvest.com/thinkbig/2014/7/3/nasdaq-getting-closer-and-closer.html?printerFriendly=true

FYI: Copy & Paste 7/4/14: Jason Zweig: WSJ
Regards,
Ted
Workers are cutting back on the stock of their own companies. It is a welcome sign of investment maturity.
Trimming your exposure to your employer’s shares is one of the most important decisions—but toughest psychological challenges—any investor can face. The wisdom of such a move has been made stunningly clear by the demise of companies like Enron, Bear Stearns and Lehman Brothers. In order to cut back, you will have to set your emotions aside and think hard about risks you otherwise might not be willing or able to recognize.
Even some people who work for Warren Buffett—arguably the best investor of our time—have gradually been reducing their holdings of Berkshire Hathaway’s stock.
Financial disclosures filed at the Securities and Exchange Commission at the end of June show that the 401(k) plans for employees of Burlington Northern, one of Mr. Buffett’s largest holdings, had slightly more than 10% of their assets in Berkshire’s stock at the end of 2013, down from nearly 22% in 2009. Employees at General Re, the reinsurer Mr. Buffett bought in 1998, shaved their discretionary Berkshire holdings to 4.6% from 5.1% over the same period. (The SEC requires companies to file these disclosures only for retirement or savings plans that hold the company’s stock.)
According to two people familiar with the matter, Mr. Buffett doesn’t set policy on retirement plans for Berkshire’s subsidiaries, and employees make their own decisions on where to put their money.
If you worked for Warren Buffett, why would you not want to put as much of your money alongside his as you could? No one can say for sure, but his employees are probably influenced by the nationwide trend to cut back on company stock.
The collapse of Enron in 2001 and Bear Stearns and Lehman Brothers in 2008 brought out tragic tales of employees who had nearly all their retirement assets riding on those firms’ own shares. The Pension Protection Act of 2006 imposed new restrictions on companies offering their stock in their retirement plans.
As a result, companies have steadily been making it harder for employees to load up on their own stock in 401(k)s. Burlington Northern, for instance, doesn’t permit its staff to invest more than 20% in Berkshire’s shares.
Between the end of 2005 and mid-2011, the most recent data available, more than one-third of companies that offered their own stock either removed it from the retirement plan or stopped permitting new investments in it, according to fund giant Vanguard Group. And none of the more than 1,350 companies tracked by Vanguard during that period launched any new company-stock funds in their plans.
A decade ago, 36% of companies offering their own stock as an investment option in their 401(k) plans required that matching contributions be initially invested in their own shares, according to Aon Hewitt, the benefits-consulting firm. Today, only 12% do.
While the problem of holding too much company stock has dwindled, it hasn’t disappeared. As of 2012, according to the most recent available data from the nonprofit Employee Benefit Research Institute and the Investment Company Institute, a fund-industry trade group, 12% of employees who could invest in company stock had at least half of their 401(k) assets in it. And 6% had 90% or more of their money in company stock.
The company you work at is so familiar to you, it can be hard to think objectively about it.
Meir Statman, a finance professor at Santa Clara University, points out that familiarity isn’t the same as superior insight.
You know quite a bit about your company because you work there. But that doesn’t mean you know more about its customers, suppliers, products, technologies and competitors than the 100 million people who collectively price its stock every day.
Familiarity also “fools people into thinking their company is safe,” says Prof. Statman.
In 2002, right after Enron’s bankruptcy, I urged an audience of individual investors to “avoid the next Enron” by diversifying out of their own companies’ shares. One person protested that he knew with his own eyes and ears that his company was safe—while diversifying into other stocks would inevitably expose him to owning at least some of the next Enron.
You might be right that your company is the next Google or could never be the next Enron, says William Bernstein, an investment manager at Efficient Frontier Advisors in Eastford, Conn., but “the consequences of being wrong are dire.”
By diversifying out of company stock, you forgo the hope of a spectacular gain, but you also eliminate the risk of being wiped out if something goes disastrously wrong at your company.
You might dismiss the risk of an Enron-type implosion as ridiculously far-fetched. But bankruptcy isn’t the only risk that your company faces, nor the most probable.
Far more likely is what Daniel Egan, director of behavioral finance at Betterment, an online financial adviser, calls “tectonic risk”—the chances that your company could be hurt by new competitors, regulations or technologies that fundamentally alter the profitability of the business.
These risks tend to blindside everyone, including chairmen and chief executives; they can surely blindside you, too. Having more than a tiny sliver of your retirement money in your company stock is an idea whose time has come—and gone.

So this is what I'm reading.
At the time everyone was touting short term bonds with their reasoning, there is no evidence this gentleman said anything. Few years later if things did not work out that way he is writing "I told you so". Why did he not make the argument few years back if horizon is "long term" (sic) then keep invested in intermediate bonds? Maybe because it was NOT popular opinion back then, but now, after the fact, it might be?
Or is this another case of "invest for the long term bond-style" article? Yes I think it is.
Much is written about investor behavior. About them buying and selling at the wrong time. Yes, I'm sure some people invest without taking time to learn anything about it. I've admitted to doing it when I had hair and possibly losing it because of my mistakes. There is something to be said about making decisions acting on data available in the PRESENT. It is not always about the future. On paper it is always about it, but not in real life.
It is not always about "if you invested 10000 in this fund 25 years back you would have 200.000". That's not intelligent writing. That is putting salt on investors wounds. It would seem all individual investors are stupid idiots. It would be nice to see someone write about intelligence demonstrated by investors. I guess I would settle for "Bill Gross fund has seen 60 billion dollars of outflows" as a sign of investor aptitude because in this case Bill Gross is the target, not the investor. In 5 years if Bill Gross proved right, another article would pop up about how stupid investors were to sell PTTRX. And given short memories, it might even be the same person.
Don't hate me because I'm celebrating my independence today.

"Since the horrible losing streak, Mr. Miller has read a pile of books and research papers about crises in hopes of getting a better grip on what happened."
LMAO. That's hysterical. Maybe not being a robotic bull cheerleader might help. Of course, all these managers who got obliterated in 2008 go, "Whocouldaknown?"
Josh Brown's terrific, really best thing about CNBC at this point. I just wish there was something besides CNBC where Brown could say something like he does in the article. If Brown actually said anything on CNBC like the above linked article, they'd probably quickly go to one of those "We're Having Technical Difficulties" screens.
From the article: "There’s very little downside for everyone involved. Except the investors."
That's what I feel like on CNBC, as well. "Gosh, don't question anyone!" Gartman can have a terrible ETF that closed, another two or three that closed (although I think those were just lack of interest) and no one ever even dares ask about it. No one even really tries to debate someone or question someone on CNBC unless it's some silly game-like thing.
There's been times where Gartman has been on Fast Money talking some nonsense about how he's "Long gold in Yen" or some other ridiculous trade that will likely reverse shortly and you see the traders looking like they want to say something but can't. Miller did terribly during the crisis and after and people throw money at him again until next time is robotic auto-bullishness gets his investors in trouble.
"In The Big Short, author Michael Lewis recounts a similar episode. On a Friday morning in March 2008, Miller was invited to present the bullish case for investment bank Bear Stearns, which had traded at $53 the previous day. During a Q&A session after his presentation, an audience member asked Miller a question: "Mr. Miller, from the time you started talking, Bear Stearns stock has fallen more than 20 points. Would you buy more now?" Miller's answer: "Yeah, sure, I'd buy more."
By the following Monday, Bear Stearns had been sold to J.P. Morgan for $2 a share."
http://www.cbsnews.com/news/bill-miller-large-cap-stocks-represent-a-once-in-a-lifetime-opportunity/
Would love to see Josh Brown on a show with former CNBCer Jeff Macke.