You can't talk about Monday without saying something about EntreMed (ENMD). They developed two proteins which are very effective in treating cancerous tumors in mice. The report was in the New York Times over the weekend, and the market went nuts today. The stock closed Friday at 12 1/16, opened today at 82, up almost a mere 70 points! It went up a little more to 84 7/8, then it went down to 40 3/4, and closed at 51 13/16 up 39 3/4! This is great for the guys who had it Friday, but it's a horrific 40% loss for those who bought it at the opening.

There is a lesson to be learned here. Sure, we all want to get in on the ground floor, but that was Friday. At the opening today, speculators got in at the penthouse. You must avoid the temptation of getting caught up in euphoria and paying top dollar. When you buy after the news is out, it's usually too late for this phase of getting in. Which certainly implies that you might get in at a later time. The best thing I can say for myself, is that I never heard of this stock before, and therefore I am spared all the woulda coulda shoulda's.

What to do now. Well, the first thing is to keep EntreMed on your radar screen. I maintain a large database of stocks I watch. I may own them, or may buy them if the price comes down to what I think is a good buy, or just keep track of stocks whose activity helps me "read" the market. For better or worse, I am very fond of biotech companies, and I own about ten of them. I will keep an eye on this one because it could be a biggie. Remember though, they have a lot of clinical trials to go through, the first of which may begin in 12 - 18 months. Of course, if the results are promising, they most likely would receive a fast track review by the FDA. In any event, you are talking about a few years here in the best case. This is plenty of time for investors/speculators to lose interest, and provide us with a chance to get in at decent prices. This is Stock Smarts at its best. Stay tuned.

The Market Pro - May 4, 1998