It's often instructive to revisit earlier articles, especially if it involves painful butt-kicking, as the best lessons lurk there.

Almost one month ago - on July 20, the Dow was 9295; today it closed at 8693, down 602 points, or 6½%. The Nasdaq was 2014; today it closed at 1842, down 172 points, or 8½%. Finally, the S&P 500 was 1184; today it closed at 1098, down 86 points, or 7%.

As though this decline is not bad enough, the carnage in the Biotechs/Genomics was much worse, and these results should not be read by children without adult supervision. That said, let's see what nasty declines these stocks suffered during this time. By the way, as we always do our best to maintain truth in packaging, I have again bravely indicated which ones I own with an asterisk (*):

This unpleasant performance is indicative of several things. First, the general decline of 6 to 8% was modest compared to broader declines in certain sectors, including the Biotechs/Genomics. Second, we have often cautioned against the danger of playing "how low is low" when trying to bottom fish. Third, the concept of relative strength is important here. If you were contemplating investing in this sector, rather than be attracted to stocks that have been beaten over the head, you would be well served by looking at those issues that have performed the best.

I still believe that the Biotechs/Genomics sector holds much promise, and more promise than danger, although there is plenty of danger as you can see. As always, there is no substitute for doing your homework, having guts, and a lot of luck. You can't buy luck, and guts is probably genetic although possibly may be acquired through experience and will. But homework is entirely up to you, and in the long run should be well rewarded. Stay tuned.

The Market Pro - August 19, 1998