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Market Wrap-Up for Jan.9 (BMY, RL, BRCM, CME, COST, AFL, more)
1/9/2012 4:06:00 PM
The first full week of market trading in 2012 began this morning with a big Pharma acquisition dominating the headlines.
Bristol-Myers Squibb ( BMY ) decided to spend $2.5 Billion of its cash hoard on biotech company Inhibitex, which boasts a promising hepatitis C treatment. The market for hepatitis treatments is lucrative, but the road FDA approval is a long, tenuous process. The purchase will hurt BMY's earnings for the next couple of years and we are currently evaluating our favorable stance on the company's shares. Similar to a pro sports team signing an elite athlete straight out of high school to a multimillion-dollar deal, BMY's move is speculative, and the odds of success are far from certain.
Elsewhere, other biotech names shot higher as traders wonder who may be next in line for a potential takeover. Biotech investing tends to go through cycles where one big takeover premium can set off exuberant stock activity. I've been around the game long enough to know that in biotech investing, the risks are extremely high. A stock price can shoot higher, only to be obliterated overnight on failed studies. Keep this fact in mind as the media parades biotech analysts out in droves amid their never-ending quest for ratings.
Wall Street analyst calls were a catalyst in moving shares today as well. Positive commentary helped shares like Ralph Lauren ( RL ) ( report here ) and Broadcom ( BRCM ) ( report here ) end the day higher. On the flipside, negative comments pulled down several names, including Aflac ( AFL ) ( more here ), CME Group ( CME ), and Costco ( COST ).
Your "Day in the Sun" Will Come and Go
As you probably know by now, I'm a big sports fan. This past weekend in the NFL, we saw the New Orleans Saints use their experience to beat a Detroit Lions team that had not been in the playoffs for many years, and whose franchise has suffered with several seasons of poor performance.
After the loss, one particular Lions player, cornerback Aaron Berry, took to Twitter. Apparently incensed by negative online reactions to his team's play, Berry tweeted that Detroit fans can now go back to being "broke & miserable."
Berry is just the latest in a string of pro and college athletes to pull verbal gaffes in social media circles. The "power of the pulpit" can be both a blessing and a curse if not handled properly. For athletes or anyone else in the public eye, developing a thick skin is a requirement in my opinion. Feeding into negative comments online will almost always land you in hot water. Can you imagine if I insulted readers in my daily newsletter each time someone criticized my work?
Athletes are some of the highest-paid professionals on the planet, and at the end of the day, they can use their positions of popularity to achieve a lot of good in the world. The magnifying glass these men and women play under is only getting bigger, but some players need to bear in mind that the spotlight won't last forever. So even if winning isn't in the cards, whining certainly shouldn't be.
Perhaps 19th century author Elbert Hubbard said it best: "To avoid criticism, do nothing, say nothing, be nothing."
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I hope everyone had a chance to check out our Dividend.com Premium members-only weekend articles , including new features that highlight some of the biggest winners and losers from the week that was, such as analyst upgrades/downgrades and earnings/story stocks. These articles are a great way to catch up on the week that was in the markets. We also have a rundown of how various Dividend ETFs performed on the week.
Thanks for reading everybody. I'll see you tomorrow!