Debtors, Psychos, and Puts September 20, 2005March 2, 2017 YOU DEBTOR! Juan: ‘How does the interest on the National Debt compare to the $200 billion cost of reconstruction in the Gulf?’ ☞ At $8 trillion now, our National Debt – accumulated since 1776 – will have reached $10 trillion or so by the time President Bush leaves office. Of this, roughly $8 trillion will have been racked up under just three presidents: Ronald Reagan, George Bush, and George Bush. In the fiscal year just ending this month, taxpayers will have paid roughly $350 billion in interest on the debt. That will rise as the debt rises even if interest rates stay low. If they rise, the burden only grows heavier. It’s not hard to imagine an annual interest expense north of half a trillion dollars by the time the current Republican Administration, with the help of the Republican Congress, are finished weakening our finances and increasing our indebtedness to foreign powers. Note that these are the same Republicans who – until they took total control of the government – were demanding a ‘balanced budget’ amendment. With that long forgotten, they now propose to strengthen America by banning flag burning and gay marriage. They are nothing if not adaptable. YOU PSYCHO! Not quite sure why so many of you sent me this link – ‘Psychopaths Could Be Best Financial Traders.’ (Premise: psychopaths don’t have normal emotions that could interfere with their making a killing.) I prefer this classic paean to level-headedness, which you very likely know, by Rudyard Kipling. I once saw it in Kipling’s own hand, framed on the wall of a deeply thoughtful investment strategist: If you can keep your head when all about you Are losing theirs and blaming it on you, If you can trust yourself when all men doubt you But make allowance for their doubting too, If you can wait and not be tired by waiting, Or being lied about, don’t deal in lies, Or being hated, don’t give way to hating, And yet don’t look too good, nor talk too wise: If you can dream–and not make dreams your master, If you can think–and not make thoughts your aim; If you can meet with Triumph and Disaster And treat those two impostors just the same; If you can bear to hear the truth you’ve spoken Twisted by knaves to make a trap for fools, Or watch the things you gave your life to, broken, And stoop and build ’em up with worn-out tools: If you can make one heap of all your winnings And risk it all on one turn of pitch-and-toss, And lose, and start again at your beginnings And never breath a word about your loss; If you can force your heart and nerve and sinew To serve your turn long after they are gone, And so hold on when there is nothing in you Except the Will which says to them: “Hold on!” If you can talk with crowds and keep your virtue, Or walk with kings–nor lose the common touch, If neither foes nor loving friends can hurt you; If all men count with you, but none too much, If you can fill the unforgiving minute With sixty seconds’ worth of distance run, Yours is the Earth and everything that’s in it, And–which is more–you’ll be a Man, my son! NTMD For the week of September 9, UBS reports 365 prescriptions, down slightly from 383 the week before. Prescriptions for hydralazine and isordil, meanwhile – the two generic components of BiDil – are averaging about 4200 a day versus 57 a day for Bidil. The bulls on the stock expect folks who are currently taking the generics to switch to the more convenient combo pill instead. The bears don’t see much evidence that patients, doctors, HMOs or insurers will rush to pay $2,500 a year for BiDil instead of $300 or $400 for the generics. UBS – which makes a market in NTMD stock – rates it ‘Buy 2.’ The difference between ‘Buy 1’ (its top ranking) and ‘Buy 2’ (its other buy rank) is ‘predictability.’ It views NTMD’s future as less predictable than ‘Buy 1.’ Yet UBS remains firm – to the penny – in its sales and profit estimates. It expects the price per pill, currently $1.80, to rise to $2.02 by 2009, at which point it expects the company to earn $3.07 a share on revenues of $341 million from 228,000 patients. In the short term, it still expects the company to report sales through September 30 of $10.1 million. (Cumulative sales from the July 1 launch through September 17 it estimates at $653,184.) Don’t sell your puts. There is a chance that the estimate of $653,184 in sales is misleadingly low and the company will blow past expectations when it releases the quarter’s numbers, causing the stock to soar. There is a chance that the doctors I’ve talked with are wrong, and that insurers will not fuss over paying for BiDil. And – even if neither of these things happens and the stock is $3 in a year or two – there is a chance it will rise to $25 or $30 in the meantime, giving us a total loss on our puts. That’s why you must only buy puts with money you can truly afford to lose. But as bets go, this would appear to remain a pretty good one. The stock closed last night at $18.03, giving Nitromed a market cap of $547 million.