CNInvesting wrote: You see that's the problem. You talk about perspective but you're biased because of your investment in the company. You're absolutely right that life expectency is higher every year and that generics will remain a big part of the pharma industry going forward. Just what exactly makes you certain that Concordia will be part of that industry in the future ? It's ironic that you talk of ''forest for the trees'' because actually, the comparison here would be ''the pharma industry for Concordia''. It's a mistake to think that because people will need generics in the future, the industry can't evolve at the same time. CXR's model is, like Valeant was, unloved right now. They need to change. Don't fall into a commitment and constistancy trap set by yourself.
The Big Short is a bad example. Those that were short the markets back then were short the greedy institutions that stole millions of people and pushed them into poverty. They were shorting the excess of greed coming from the banks. They were shorting the unsustainability of the situation and the madness in the market. Precisely everybody was long the housing market and 100% certain it was the best thing in the world. Even those wanting houses were happy, when the banks weren't doing a background check and giving them a mortgage anyway.Were they happy of making millions on that short ? I think they didn't care about the money. As investing should be, it's about the process, not the profits. If you love the process, money is secondary and only a validation of your thesis. Were they wrong to short ? No. As a matter of fact, people lost their homes afterwards. Not because these guys were short, but because of the system that failed them.
Again, your win-win theory doesn't make much sense. There's always a flipside in the markets. People were quite happy to make a ton of money by being long Valeant back then, and I'm sure some folks needing a guilt-free conscience, like you seem to, were proud that the company in which they invested was helping peoples' lives. On the other hand, you had customers getting ripped off by price gouging and in need of their medications. Could you honestly say this is a win-win situation ? Was it a win-win situation when the scandal was uncovered ? Was Andrew Left wrong for being short Valeant at the same time or was he right because of the lies the company made up to its shareholders ? The people who made money on Valeant lost money on Valeant. Pushing your argument, is it win-win to invest in oil ? Win-win because you invest in the energy industry which helped develop the modern world and still does. Win-lose because you give money to invest to a company that pollutes the world at the same time. It's a matter of perspective and it's naive to think there's such a thing.
Anyway, once again, averaging down isn't a cure to your losses. I'll say like I said before, you should hedge. For everyone saying it's not useful, I have 2 things to say: a) you know nothing about investing and, b) Read the Dao of Capital by Mark Spitznagel. It's quite insightful.
GL to all.
DrCalmDown wrote: Don't put too much emphasis on the August 12th earning report. Generic drugs will always be in demand, and the demand will only increase in the next decade, as the baby boomers step into their 70s and 80s, people continue to live longer, and globle population keeps growing.
On August 12th, if the SP goes up dramatically, sell some shares to prevent overweighting. If SP drops by a significant amount, it's another great oppertunity to invest in a company with good long term prospect. If nothing happens, simply hold onto your shares and enjoy the close to 2% dividend, which is not too bad in today's low interest environment.
Some thoughts about the shorts. There is no doubt that shorting can make a huge profit. The 2015 movie, "The Big Short" is a good example illustrating the success of such strategy. However, a strategy that produce a Win-Lose situation always has its downside. In the movie, Michael Burry and Mark Baum did make a huge profit shorting the US housing market. However, none of them were truly happy about what they have accomplished.
Seek Win-Win. This is one of the fundimental principles in investing and in life. Invest in companies that you believe will make a positive change and better people's life. When money is made this way, you actually feel good. Hence, I don't endorse shorting, using the Win-Lose strategy may let you win a few battles, but you always lose the war.
Thoughts on CXR's debt. There is no doubt CXR has a lot of debt, total debt/equity ratio is ~3. CXR is ~4 billion in debt, and its asset generates ~400-600 million annually. To me, this is like a 400K house (bought with mortgage) producing 30-60K rent annually (10-15%). I don't see any risk of defaulting. Plus, the revenue is expected to increase in the future, given our aging population.
For better or for worse, I am looking forward to August 12th. GLTA.