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Answers - Diversification - It's Not Just A Word
When the financial markets are extremely volatile traders can feel their stress levels rising. But there is no reason to be stressed if you are diversified. If a position turns into a losing one, but that position is only 10% of a well diversified timing portfolio, you will not feel the same as you would if
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
it was your entire portfolio. Diversified portfolios are just as profitable, but you sleep better.
The current markets are quite volatile. Rallies lasting only days, followed immediately by sell-offs. Volatility is great if it is within a trend, but volatility that only moves the markets up and down quick
The current markets are quite volatile. Rallies lasting only days, followed immediately by sell-offs. Volatility is great if it is within a trend, but volatility that only moves the markets up and down quick
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
y, within a sideways (trendless) trading range, can be quite unsettling.
Such markets are great for day traders, or should we say those who happen to be nimble enough to take quick profits. But for market timers and trend traders, the "lack" of a trend often results in small losses.
While no one wants to
Such markets are great for day traders, or should we say those who happen to be nimble enough to take quick profits. But for market timers and trend traders, the "lack" of a trend often results in small losses.
While no one wants to
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
lose, we must keep things in perspective. Remember the saying, "keep your losses small, and let your profits run." That saying has been around for a long time for a good reason. There are times when you generate small losses, and that is just a fact of active market timing and in fact all trading.
We shoul
We shoul
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
not lose sight of the second part of the saying... "let your profits run." This is what all market timers look for. The next trend "is" around the corner. There is always another trend, and when it begins, the profits are made. There are powerful trends in progress right now! Look at the gold, the dollar a
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
d bonds.
Diversification Has A Place In All Portfolios
Remember that while very aggressive timing strategies do incredibly well over time, they can be frustrating over short time frames. During such times it is comforting to be at least somewhat diversified. We have spoken about and recommended diversific
Diversification Has A Place In All Portfolios
Remember that while very aggressive timing strategies do incredibly well over time, they can be frustrating over short time frames. During such times it is comforting to be at least somewhat diversified. We have spoken about and recommended diversific
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
ation within timing strategies many times in this column. Believe me, it has its place in "your" timing portfolio.
If aggressive timing is causing you heartburn, try diversifying. One of the easiest ways to diversify, while still actively trading the markets, is to use sector funds. Let's take a look at th
If aggressive timing is causing you heartburn, try diversifying. One of the easiest ways to diversify, while still actively trading the markets, is to use sector funds. Let's take a look at th
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
advantages of sector timing.
Trading The Sectors
How does a mutual fund market timer take advantage of volatility, while protecting himself or herself from the very real risks such volatility creates, as well as from the potential drawdowns that can occur during such times? The answer is by trading the s
Trading The Sectors
How does a mutual fund market timer take advantage of volatility, while protecting himself or herself from the very real risks such volatility creates, as well as from the potential drawdowns that can occur during such times? The answer is by trading the s
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
ctor funds. Here is a "quick" list of reasons why:
1. Diversification: By having small positions in multiple industries, you reduce exposure to any single industry being affected by a negative news event.
2. Volatility: While individual sectors are no less volatile than the rest of the market, they do not
1. Diversification: By having small positions in multiple industries, you reduce exposure to any single industry being affected by a negative news event.
2. Volatility: While individual sectors are no less volatile than the rest of the market, they do not
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
move together. So the volatility to one's portfolio is considerably reduced.
3. Drawdowns: Because sector funds go to cash during sell signals, and because there are always some funds in bull markets at the same time there are others in bear markets (during which those sectors are protected in money marke
3. Drawdowns: Because sector funds go to cash during sell signals, and because there are always some funds in bull markets at the same time there are others in bear markets (during which those sectors are protected in money marke
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
funds), drawdowns are kept to extreme minimums.
4. Good in All Markets: There are always single industries in their own bull markets. Even during a cyclical bear market, such as we experienced during 2000-2002, there were always some industries moving higher. And if not, you are still protected by being i
4. Good in All Markets: There are always single industries in their own bull markets. Even during a cyclical bear market, such as we experienced during 2000-2002, there were always some industries moving higher. And if not, you are still protected by being i
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
money market funds.
5. Active Timing: Though sector timing is not aggressive, it is certainly active. You will always be trading the bullish sectors, and exiting the under performing ones. In some respects, it is the equivalent of running your own well managed mutual fund.
6. Trends: Industry sectors ten
5. Active Timing: Though sector timing is not aggressive, it is certainly active. You will always be trading the bullish sectors, and exiting the under performing ones. In some respects, it is the equivalent of running your own well managed mutual fund.
6. Trends: Industry sectors ten
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
d to trend. And when they trend, they often move further (in either direction) than anyone expects. During a strong bull run, it is common to find individual sectors that double the gains of the overall market.
Winning The Battle
Even in volatile market conditions the Sector Timer strategy performs except
Winning The Battle
Even in volatile market conditions the Sector Timer strategy performs except
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
onally well.
Because those industries which are poor performers will push their corresponding sector funds into cash positions, sector timing winds up with only the most bullish sectors actually invested. This is proactive money management at its best. Constantly putting your money in the strongest sectors
Because those industries which are poor performers will push their corresponding sector funds into cash positions, sector timing winds up with only the most bullish sectors actually invested. This is proactive money management at its best. Constantly putting your money in the strongest sectors
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
while removing it from the weakest sectors.
This is where the diversity inherent in sector timing stands out. Top performing sectors are where your timing funds are allocated, and no one sector can cause irretrievable damage to the portfolio should that industry collapse without warning.
But most importan
This is where the diversity inherent in sector timing stands out. Top performing sectors are where your timing funds are allocated, and no one sector can cause irretrievable damage to the portfolio should that industry collapse without warning.
But most importan
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
tly, as a "diversified" strategy, sector timing is winning the battle against a very difficult stock market.
Conclusion
Over the years, sector fund timing may go down as the "best strategy ever created" because of its ability to target funds into "only" those industry sectors which are performing well.
T
Conclusion
Over the years, sector fund timing may go down as the "best strategy ever created" because of its ability to target funds into "only" those industry sectors which are performing well.
T
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
e low drawdowns, low volatility and diversification inherent in sector timing, not to mention strong profitability, cause this strategy to stand out from all the others.
In volatile market conditions, such as we are experiencing now, sector timing can create profits when other traders are lucky just to be
In volatile market conditions, such as we are experiencing now, sector timing can create profits when other traders are lucky just to be
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
olding onto their capital. Drawdowns, if they occur at all, become almost a non-event. A one or two percent drawdown in a sector that is only one-sixteenth of your portfolio, will not cause anyone to lose sleep.
While sector timing may not make huge gains during cyclical bear markets, being mostly in cash,
While sector timing may not make huge gains during cyclical bear markets, being mostly in cash,
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
the strategy will protect your investment capital. And it will then outperform during bull markets, always keeping you invested in those industries that are in their own bull markets. And remember, cyclical bear markets are not an every-day occurrence.
Sector timing also requires a minimum account size. R
Sector timing also requires a minimum account size. R
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
member, there "could" be as many as 16 open positions at any one time, and closed (bearish) positions should be in cash (money market funds) with those funds remaining untouched. A good guess is that a sector timing portfolio should be at least $20,000 - $25,000 to start if using a Rydex or ProFunds account
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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