We had a wonderful meeting at BJ’s Restaurant and Brewery! We had a total of 7 attendees: (from left to right) Elena Swindull, Greg Bartell, Kevin Day, Jeff Harrington, Nick Souders, VJ Arjan and there was 1 more attendee who chooses to remain anonymous.
The Stem Cell Industry
Nick works for the Dana-Farber Cancer Institute with member access to the facilities of the Harvard Medical School. He received his Ph.D. in oncology and has done extensive research and experimenting in the cutting edge of the bio-medical field.
He had an unconventional conviction on the stem cells industry, very simply that embryonic stem cells do not work. The science behind embryonic stem cell technology is fanciful. According to him, these stem cells are either, one, rejected by the body, or, two, destroyed by the body’s immune system as a foreign agent.
What he believes is occurring in this industry today is that Wall Street is selling hope and playing on people’s fears in order to secure funding.
Greg Bartell also chimed in noting how he feel the doctors on in on the stem cell payroll. He recently experienced his doctor trying to insistently sell him on pursuing stem cells.
The proof of this attitude, Nick continued, is in several stem cell start-ups, notably, Geron Corporation, which has from day-one promised the world to investors to only end up not delivering at all. As a consequence, it has dropped from above $8 two years ago to the mid $2 range and currently has a return on equity of -40%.
Nick also commented on his specialty, cancer vaccines, which he said shows more promise. He explained how there are currently many options in treating cancer, the only downside is that each vaccine lacks consistency in its effects on different patients it treats. It is difficult to find a way to kill cancer cells occurs universally. Often times a specific treatment will work on one patient eradicating a tumor, while another leads to no effect and even some harmful side-effects.
At the cutting-edge of this field is a vaccine he is currently working one, for which he has a patent under his name, which involves entering a cancer cell by stealth like a bacterial Trojan Horse, which marks itself for destruction by the immune system. This strategy is still in the stage for extensive testing.
He also commented on a stock that Kevin Day has mentioned in the past, Aeterna Zentaris (AEZS) and that he believes there is great credibility and brilliant scientists working towards oncology therapy.
The Market
A subject that comes up every meeting, we discussed where we should be looking to invest our money. Kevin believes that if one is still holding positions right now that one ought to be a buyer, not a seller. One could have been a seller before the recent sell-off in August, but not now.
If there were anywhere to start “nibbling”, it would be in the financials and the emerging markets. Some have noted how Warren Buffett’s purchase of $5 billion preferred in Bank of America may be signaling a bottoming of the financial sector. Kevin believes that it is time to start cautiously nibbling on some of the larger, less risky banks like Wells Fargo.
In terms of emerging markets, it could be a bumpy ride, but the long-term gains should pay off handsomely.
Elena’s Trip to Slovakia – The Rise of Capitalism in Eastern Europe
Elena Swindull talked about her recent trip to Slovakia, where she was born and raised. She was back home visiting her family and relatives, and could not help noticing the incredible rapidity of change there.
She noted that ever since Slovakia joined the Eurozone in 2004, the changes have been remarkable. While she was there, she saw for the first time, modern shopping malls, no different from the ones we have in the US. Infrastructure was also changing and being upgraded at a break-neck pace.
She recalled living through the end of the Soviet Union, but admits, she was not old enough to really understand what was occurring at the time.
There is little doubt that the formerly communist nations are starting to embrace capitalism and this is a trend that she foresees continuing into the next few decades.
Romney-Perry Showdown
Kevin Day and Jeff Harrington discussed how Rick Perry is no fool; his statements have been purposefully provocative in order to attract attention to him. As this campaign continues, they believed that he would tone down his rhetoric to pander to more moderate Republican voters.
He certainly has a few politically difficult stances on, for example, Social Security, which he has called in a recent debate a “Ponzi scheme” and is in favor of abolishing it for a privatized structure. This certainly rings true for many in the Perry base, but it will be hard to convince 10 million voters who receive Social Security that it needs to be drastically reformed.
Regardless of his beliefs, it will certainly make for a very interesting campaign as the debates continue here in the near future.
The More Things Change, The More They Remain The Same
Kevin Day talked about the ushering in and the fading away of the technical analysis crowd. The recent market environment has been so volatile and uncertain that literally the rules for technical analysis have been thrown out the window.
He believes, that over time, ultimately fundamentals will determine the movement of the market, now more so than before the crisis after 2008.
At this point in time, he still believes that the fundamentals indicate that things can get worse before they get better. He does not believe we are headed for a double-dip recession, but also does not believe we can rule it out completely.
The recent decision by the Federal Reserve to keep interest rates are current levels until mid-2013, shows that even the Fed believes the economy will be very weak for the coming two years.
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