Michael Murphy

Investing in the Obesity Drug Basket

dlsbrk - the soft drink industry filed a 100+ page brief against the approval of high fructose corn syrup, citing a long list of health concerns. Coca-Cola and Pepsi feared a "race to the bottom" as off-brand sodas used the cheaper HFCS to undercut prices. Once it was approved, Coke and Pepsi had no choice but to join in.

Carbs are not the problem? Well, we are all entitled to our own opinion. "The government's initial decision 30 years ago to promote low-fat diets was not based on recommendations from doctors or scientists, but rather from lawyers who worked for Sen. George McGovern in the mid-1970s."
abcnews.go.com/Health/...

Investing in the Obesity Drug Basket

rob134: The overall weight loss figures are 5.9% for lorcaserin, 6.1% for Contrave, and 10.6% for Qnexa. Don't be fooled by variations in the placebo response. Lorcaserin and Contrave were about equal, and Qnexa was, as you said, better.

Now look at adverse events - 7% for lorcaserin, 22% for Contrave, 18% for Qnexa. Then look at the diet and exercise regimen - essentially nothing for lorcaserin, and only a little bit more for Contrave. Much more for Qnexa.

That's why all these drugs are winners. The elephant in the room is LorPhen. 20% of obesity doctors surveyed said they would prescribe lorcaserin plus phentermine from the beginning. Most of the other 80% said they would prescribe lorcaserin instead of phentermine. I'm sure they would be equally happy to prescribe Contrave or Qnexa instead of phentermine. In the real world, I expect doctors to switch patients among these four choices as needed to find that balance between weight loss (which includes patient compliance on the diet and exercise required) and side effects.

That's why I think ARNA, OREX and VVUS make a great basket to participate in a virtual revolution in obesity care. You don't have to guess on which one might have FDA approval problems, or which ones doctors will start with, or which one will eventually get the largest market share. Just buy them all.

Buy The Obesity Drug Basket: ARNA, OREX, VVUS

I forgot to mention the forthcoming Obesity Society annual meeting in Washington, DC October 24 - 28. All three companies will present additional data there, and that is an excellent reason to buy the basket of stocks well before the meeting.

Buy The Obesity Drug Basket: ARNA, OREX, VVUS

biomax2000 - the overall weight loss figures are 5.9% for lorcaserin, 6.1% for Contrave, and 10.6% for Qnexa. Don't be fooled by variations in the placebo response. Lorcaserin and Contrave were about equal, and Qnexa was better. Now look at adverse events - 7% for lorcaserin, 22% for Contrave, 18% for Qnexa. Now look at the diet and exercise regimen - essentially nothing for lorcaserin, and only a little bit more for Contrave. Much more for Qnexa.

That's why all these drugs are winners. The elephant in the room is LorPhen. 20% of obesity doctors surveyed said they would prescribe lorcaserin plus phentermine from the beginning. Most of the other 80% said they would prescribe lorcaserin instead of phentermine. I'm sure they would be equally happy to prescribe Contrave or Qnexa instead of phentermine. In the real world, I expect doctors to switch patients among these four choices as needed to find that balance between weight loss (which includes patient compliance on the diet and exercise required) and side effects.

Penn Bioinvestor - I like ARNA, OREX and VVUS, as the article says. They make a great basket to participate in a virtual revolution in obesity care. Oh, my target for DNDN is five years out, as stated.

Want to Own Silver? Forget About SLV

SLV is audited by PricewaterhouseCoopers one of the Big Four accounting firms.

"In our opinion, the financial statements listed in the accompanying index present fairly, in all material respects, the financial position of iShares Silver Trust (the “Trust”) at December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the periods presented in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Trust maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)....
Our audits of the financial statements included examining, on a test basis, <b>evidence supporting the amounts and disclosures in the financial statements</b>, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, <b>assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk</b>. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions."

If you don't think they counted the silver, you are wrong.

OMG - It's A V-Shaped Recovery!

Industrial production for July came in at 96.0, not 97.0. I still think it will hit 99.4 in August, but if it doesn't, real GDP growth this quarter will be closer to 3% than 4%.

The Case for Depression, Part 1: Unemployment

"It's pretty intuitive that recovery isn't possible without sustained improvements in the rate of unemployment."

You surely know that the unemployment rate is a lagging indicator, and that virtually every recovery happens without a sustained improvement in the rate of unemployment for many months, or even a year. Why on earth would you say "it's pretty intuitive" instead of "statistics on past recoveries show?"

Are GLD and SLV Legitimate Investment Vehicles?

I have recommended both GLD and SLV to my subscribers after reading the prospectuses, so I read this article carefully to see what I may have missed.

1. As may others have pointed out, the prospectus language the author quotes, “Neither the Securities and Exchange Commission [SEC] nor any state securities commission has approved or disapproved of the securities offered in this prospectus, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense,” is boilerplate found in virtually every prospectus. It has no meaning for the truthfulness of the statements in the prospectus, and if any of them are ever found to be untruthful, the SEC can prosecute and jail people.

2. Also as others have pointed out, the two banks are simply custodians of the metals. They cannot buy or sell them, short them or borrow them. They are on the hook only to be sure all the gold and silver bars are there are at all times. If any bars went missing, the ETF could sue the custodian in a heartbeat.

3. It is true that if the independent auditors are incompetent or in cahoots with the custodian, bars theoretically could be stolen and covered up. This would require a large conspiracy, and after the Enron debacle my experience is that accounting firms go overboard in the opposite direction, with numerous checks and balances. I also suspect SLV and GLD have theft insurance. The probability of a theft or missing bars is minuscule.

4. The call for the CFTC to investigate is very strange, since these entities are not regulated by the CFTC. They are regulated by the SEC.

5. The focus on the fact that these entities are not regulated by the Investment Company Act of 1940 is equally strange, since they are not mutual funds.

My conclusion remains that aside from a reasonable amount of junk silver for use in an emergency, it is safer and very effective to use GLD and SLV to protect your assets, especially in a 401-K, against accelerating inflation. While this article required me to spend an hour of research re-evaluating my position, and listening to contrary opinions usually is very beneficial, ultimately the hour was wasted time because the author's points were so inaccurate or irrelevant.

Washington's Dilemma: This Isn't a Recession, It's a Collapse

The recession ended in June. See seekingalpha.com/artic.... But the opportunity to restructure entitlements in bankruptcy is being missed, so after an inflationary run-up in the economy for a few years, a much deeper recession is coming. California will remain among the walking wounded for most of the time between the two recessions, as they have all the problems of the federal government without the ability to print money. My rear-view-mirror date was January 3, 2009, after over 40 years of living in California.

Why the Recession Is Over

The latest reading on the Weekly Leading Index from the ECRI (7/17) came in at a 7.0% growth rate, so the economic recovery continues to accelerate. This is a FIVE-year high in the growth rate for the WLI. The Managing Director at ECRI: "The recession is already ending. With WLI growth surging to a five-year high, the recession's days are numbered, and the coming recovery is looking more resilient. The bulk of the government spending is still in front of us. The current stimulus may reinforce the recovery many quarters from now, but it's not the reason you're having a recovery."

This Recession Isn't Over: Now for the Hard Part

"The recent leading indicators figures are almost entirely stock market returns. The stock market returns have contributed over 50% of the figures strength."

The latest (July 11) reading on the Weekly Leading Index from the ECRI came in at a 5.4% growth rate even after a down stock market for several weeks, so the economic recovery is accelerating. This is a two-year high in the growth rate for the WLI. The Managing Director of ECRI said: "It is increasingly evident that, despite widespread misgivings based on backward-looking economic data, the end of recession is at hand."

Do you think he lacks understanding of the contributing components?

Why the Recession Is Over

1. The International Monetary Fund has revised up growth forecasts in the second half of 2009 and into 2010.
2. The latest reading on the Weekly Leading Index from the ECRI came in at a 5.4% growth rate, so the economic recovery is accelerating. This is a 2-year high in the growth rate for the WLI. The Managing Director at ECRI: "It is increasingly evident that, despite widespread misgivings based on backward-looking economic data, the end of recession is at hand."
3. jhartz: If you are wrong in your assessment, how many future business successes believing your thinking will shut down just as the economy turns up?

The Truth About Jobs

"Remember, unlike Non-Farm Payrolls and the Unemployment Rate, which are lagging indicators, Jobless Claims are coincidental indicators."
OK
"Initial Jobless Claims report which indicated that the number of new applicants for unemployment insurance dipped below 600,000 to 565,000."
OK, this coincident indicator is getting better. Leading indicators started getting better quite a while ago. Further evidence the recession ended in June.
seekingalpha.com/artic...

15 Stocks You May Want to Keep Out of Your Portfolio

Thanks for the heads-up on SanDisk, the only semiconductor company enjoying increasing prices for its chips thanks to the explosive sales of netbook computers. Did you factor that into your model?

Why the Recession Is Over

ebor - Thanks for the dailykos link - at least there are two of us.....

swaps - Unemployment is a lagging indicator, and this is likely to be a jobless recovery. So watching unemployment for a sign to get back into the market means you will miss most of the first double off the lows.

I have two kids in the workforce, one lost his job and is still unemployed, the other quit two jobs to go to law school on her savings. To quote the dailykos article: "Let me add one more point: I am not saying it's wonderful that people are out of work, or that we shouldn't increase the length of time people are on unemployment insurance or anything remotely or even non-remotely related to that."

I'm just saying the recession is over, the worst is behind us, the S&P 500 is short-term oversold and headed for 1060, and if three or four more people start telling the big institutions the recession is over, it will go to 1160 and maybe 1250.