Screen capture via Cassava Sciences' video for their Simulfilam Alzheimer's disease treatment.

When A Biotech Stock Goes The Wrong Way 

Responding To A Crash Prediction In July 

In late July, the Fear & Greed Index hit the "Extreme Fear" level. 

Screen capture via ZeroHedge.

Screen capture via Portfolio Armor on 7/19/2021.

Cassava Sciences Collapses 

In August, a whistleblower petitioned the FDA to halt Cassava Sciences' clinical trial of its Alzheimer's drug. The company responded, calling the allegations "false and misleading", but the damage to the stock was swift. The chart below shows how SAVA has done since our site created the portfolio above. 

Our Hedged Portfolio Containing SAVA 

Here's how our hedged portfolio containing SAVA has performed over the same time period. 

As of Friday's close, our hedged portfolio was up 6.53%, net of trading and hedging costs, versus the SPDR S&P 500 Trust ETF (NYSE:SPY) which was up 4.82% over the same time frame. That's despite one of the seven names in our portfolio being down nearly 40%. 

The Benefits Of Concentrating And Hedging

The benefit of concentrating your assets into a handful of names is that if one or two do well, they have an outsized impact on your returns. The benefit of hedging is that if one or two names do poorly, their negative impact on your returns is limited.