I used to love to go to casinos to gamble. I was never a big player, far from it, but I could sit there for hours and play blackjack or video poker. But since I started trading stocks, I have no desire whatsoever to go to a casino. That "need" is completely fulfilled by watching my Fidelity Active Trader screen during the day, reading stock messages on iHub, and watching the streaming ticker at the bottom of the screen on CNBC. It is really the ticker showing live trades that matters for me on that channel, and the background discussion by the talking heads often gets in the way. Now, I don't want to imply that trading or investing in the stock market is just like gambling in a casino. After all, in a casino you have that cute waitress in that skimpy outfit bringing you free drinks. I have to fetch my own here. But there are similarities, because whatever it is about the chemistry of my brain, trading stocks satisfies what I used to get from time to time by visiting a casino.
Most years, the Wall Street slogan is "sell in May, go away", meaning that traders reduce their positions in May and quit trading for the summer. Summer is vacation time, so volumes (and I believe stock prices) typically decline and it is tough to get anything that exciting going. I thought this summer would be different because of the extraordinary economic events of the past year, but I was wrong. I am wrong a lot in this business, but when you are right, it can be really fun. Today is potentially one of those days. (So far this year, I have done pretty well. At this moment, I am up about 20% year to date. At the beginning of the summer, I was up about 50%, but the past couple of months have hindered my progress. I currently hold 10 stocks, and I am in the red in every one of them).
One of the stocks in my current holdings is Cell Therapeutics (CTIC), which I bought a couple of months ago. I bought the stock at several prices, but my average purchase price was $1.78. The stock closed on Friday at $1.69. CTIC is a start-up biopharmaceutical company, and their potentially big breakthrough is a drug called pixantrone, which is a treatment for "relapsed or refractory aggressive non-Hodgkin's lymphoma". I have no idea if this drug is any good, but there has been a fair amount of hype (meaning market action) surrounding this stock for weeks. In fact, several institutions (e.g., Barclays and Goldman Sachs) have taken large stakes in this company, and that gives me hope. Plus, if you watch the daily trading, the stock acts like it "wants" to go up. Let me announce at this time that NO ONE WHO READS THIS SHOULD BUY OR SELL ANY EQUITY BASED ON WHAT I SAY HERE---CAUSE I KNOW NOTHING. This vignette is simply to illustrate what excites me currently and how a retired baby boomer spends his day.
The big deal with these biopharma stocks is getting FDA approval of your drug. When that happens, the stock price always goes up, usually significantly. CTIC is waiting on approval for pixantrone, but first things first. We had been waiting to hear that the FDA might "fast-track" this drug for approval, and that news was to come out today. Instead, news was released early this morning that the FDA would accept the new filing for pixantrone and that they would decide by September 4 whether to "fast-track" the drug. So the news was not all that we wanted, but it was something.
Let's watch this one together today, just for fun. I will add an addendum to this post when the market closes today to tell you the stock's closing price and any other details that I think are interesting. If this stock pops today, I will celebrate this evening with a scotch and a cigar. If it does not, I will have a scotch and a cigar. Either way, I do ok. But that cigar tastes so much better when you win.
(Addendum: small irony today. CTIC started off strong but actually closed down $.05 or about 3%. But I bought more of CTIC today. On the other hand, my two other biopharma stocks woke from a sleep of several weeks. AGEN closed up 4% and HEB closed up a whopping 17% on big volume. I am now green for HEB. The latter two are developing flu vaccines, and the swine flu story got another boost today. So there you go.)