Replies to post #88475 on Biotech Values

[DewDiligence]

Re: Stockpicking-contest math (MON)

I am somewhat surprised by DD’s pick of MON. I like the stock very much in the real world, but I would think the beta is way too [low].

A few points to consider:

• There’s a substantial vig stemming from the quiz question in #msg-39687555.

• I think MON has low-balled its FY2010 guidance and can handily beat the guidance with even a mediocre economic recovery.

• The stock is temporarily our of favor due, in part, to hatchet jobs like the one published by the AP in #msg-44480799; there’s a limit to how many of these kinds of pieces can be written before investors recognize the BS.

• I’m on record that MON is the stock I would own for the next 5-10 years if I were allowed to own only one. It helps to have this kind of tailwind even in a contest as short as one year.

By the way, you were the one who posted the correct answer to the quiz underpinning the first bullet point above: #msg-39728397 :- )

[DewDiligence]

Mainly it us just a matter of maximizing your variance.

That’s an important consideration, especially in a contest involving a large number of participants (as you noted). A simpler and equally valid rationale for the {20%x4, 5%x4} allocation in the SI contest is that you want to give the maximum possible weight to your best investment ideas.