Analyzing the performance of my previous picks is by far my favorite part of writing this blog. It has on many occasions allowed be to learn from my mistakes.
I have moved the numbers to Google docs so that they are easier to read. Click here to enlarge.
The bottom line return for this portfolio of picks is 14%. This is the average of all the picks assuming one would have invested equal amounts. This is not the greatest return over almost two years but here is how I plan to improve on that:
The biggest mistake I made in the past two years was not being in two "HOT" stocks, Celgene (CELG) and Alnylam (ALNY). My reasoning for Celgene was valuation, which was true for some time but I failed to realize the latest recovery to M&A activity.
ALNY was a tougher call to make as I was waiting to see more proof that their technology was going to work. Their recent successful partnerships have shown that other companies are interested in their antisense technology and the stock has seen a significant increase.
In the buy-high-sell-low category, Amylin (AMLN) was a big disappointment. I have learned my lesson about calling winner products before the game is over.
Another more general mistake is the lack of trades during obvious times of bottoms and tops. The remedy for this problem would require me to take time from other activities but I will try to make time to be more diligent on this.
Finally, I have learned that small cap biotechs kill returns. Therefore, in real life, it is best to allocate a smaller investment size to small caps and pick more than one or two of them in case most fail to create any returns. My model portfolio gets hurt due to the equal weighting of all of the stocks.
For the remainder of the year, I am continuing to be bullish on biotechnology and pharmaceutical sectors. I am adding Alnylam, Amgen (AMGN), Seattle Genetics (SGEN) and Rigel (RIGL) to my model portfolio and I will write more about them in the future.