Article by Investment U
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In focus this week – Bristol-Myers Squibb Company’s (NYSE: BMY) new powerhouse cancer drugs, junk bonds now and the SITFA.
There are changes coming in the medical world that will be as revolutionary and life changing as anesthesia was in the mid 19th century.
There are changes coming in the medical world that will be as revolutionary and life changing as anesthesia was in the mid 19th century.
Bristol-Myers Squibb announced this week that not one but two of its experimental immunotherapy drugs, not chemotherapy drugs, immunotherapy, have shown amazing results in advanced stages of several types of cancer, and the results are long lasting.
These drugs are turning life expectancies from months to years!
Immunotherapies are a whole new way of treating cancer, and other diseases, by getting the own immune systems to recognize a cancer cell as a foreign body and fighting it. Until now cancer cells have been able to stop our immune systems from responding to them as a threat. That gave cancer carte blanche access to our bodies.
Dr Suzanne Topalian of Johns Hopkins said that these immunotherapy drugs are not like any other drug treatment. Your immune system has a memory so these treatments should work for life just like the vaccinations we received as children.
The market for this type of treatment is so huge there aren’t even any estimates yet on how much this could mean to BMY’s bottom line. This could transform the medical industry.
Other companies that have similar immunotherapy trials in place are; Roche (OTC: RHHBY), Glaxo Smith Kline (NYSE: GSK) and Merck (NYSE: MRK).
Put this one on your back burner and watch for news about BMY’s phase three trial that is to begin this December. Remember, buy on the rumor, sell on the news, but in this case as the news begins to leak before the end of the trials – as it always does – it may be best to keep this one for the long run.
William Larkin of Cabot Money Management said in the Journal this week that if you need yield, and who doesn’t, you need high yield, but you have to be comfortable with some volatility. These are not CD’s.
On the plus side of junk bonds, despite a very slow economy, high yield default rates are well below long term averages. The Journal reports the default rate at 3% for the past year and Moody’s expects it to drop to 2.8% next year. That means 97% of all high yield bonds are paying exactly as promised!
Fears of Spanish bank problems and the continuing Greek problems have caused a recent sell off in corporate bonds which according to Jamie Farnham, managing director of credit research at TCW, it’s a buying opportunity.
Farnham said in a Wall Street Journal article that high yields, like all investments, have swings between panic and euphoria but long term high yield looks very good.
The slow growth rate of the U.S. economy of 1.9% is worrisome for stock investors but according to BNP Paribas’s Martin Fridson 1.9% is plenty for companies to cover their interest payments so high yields are in very good shape in this environment.
Payout levels of 5% to 7% are being quoted in Barrons’ and the WSJ but if you follow my articles in the Ultimate Income Letter or here at Investment U you know there are opportunities out there as high as the mid-teens, you just need to know where to look.
For the informed, high-yield bonds are a great way to earn much more than stock market returns with a lot fewer headaches and a lot less volatility.
This week it goes to the CEO’s out there who think losing a billion or so dollars of their share holders money is just part of doing business.
A recent WSJ article recommended the Slurpee Rule be enforced for any CEO who loses a billion or more dollars.
What’s the Slurpee rule? The Slurpee Rule says any CEO who loses a billion or more should be fired immediately. No severance package, no stock options, nothing, just get out, and be made to work at 7-Eleven cleaning the Slurpee machines.
The WSJ writer thinks this should give the fallen CEO’s a renewed perspective on how hard it is to earn a billion dollars.
I have to agree…
Article by Investment U