Dr. Harvey Tran Daily Letter: The 50/50 Principle

 

Summary

• I share with you the investing lesson to take 50% profits on your big winners while letting the rest ride further upsides.
• After rising to its peak of $273 back in 2020, Galapagos shares tumbled due to fundamental depreciation.
• By implementing my strategy, you could have secured your profits while banking any upside if the company managed to turn around.

Tatiana Dyuvbanova/iStock via Getty Images

Dear Readers,

In this letter, I want to share with you an important biotech investing principle that is the "50/50 principle." In my view, this rule is important to your investment success because it lets you know when to sell. Now, I'll illustrate this phenomenon through the investment story of Galapagos (GLPG). 

Back in June 2018, I initiated this under the radar Belgium company, Galapagos. During the time, the shares were trading at $100.19. After the company inked the $5.05B mega partnership with Gilead Sciences (GILD) for the development and commercialization of its lead medicine (filgotinib), the stock rose as high as $273 in February 2020.

IBI Market Insight: To Profit From Value Disconnect

Summary

In recent years, stellar breakthroughs such as CAR-T and gene therapies painted the bioscience landscape.

Previously limited by expertise, we're witnessing an increasing number of companies brewing gene-editing molecules.

Precision medicine therapeutics and companion diagnostics are powering the next wave of innovation.

Nonetheless, the China Trade War and drug pricing pressure lead bioscience stocks to exchange hands at a deep discount.

At the turn of the next market cycle, the long-term oriented investors will enjoy sizable profits.

I like the idea of using artificial intelligence because we're so short of the real thing. - Charlie Munger

I hope that you guys had a great weekend. Asides from doing light tasks like posting on my social media, I shifted away from work during the weekend. In my view, it's best to conduct investment research and news analysis during weekdays. As family and God are matters of the heart, they should at least have the weekend. I believe it's more healthy and balance for you to reserve the weekend to rejuvenate and improve other arenas of life. After all, there is more to life than investing. And, the investment process is not a sprint. It's a marathon so pace yourself accordingly.

Figure 1: Charlie Munger and Warren Buffett (Source: Robyn Twomey)

That being said, I'd like to kick off the week with another series coined Market Insight. This publication is similar to the Industry Trends analysis that I conducted from time to time. Despite the resemblance, there are significant differences. Specifically, Market Insight explores current affairs that are driving broader market behaviors. Aside from providing you with the intelligence affecting your investment value, Market Insights offers various strategies to help you capitalize gains and minimize losses.