RESPECT

     Aretha Franklin recorded the song "RESPECT" in 1967. It soon became her signature song. Anyone with a pulse can't help from grooving to this tune when it comes on the radio. Originally recorded by Otis Redding in 1965, the song lyrics demand respect from the singer's lover. Somebody else who made a fortune complaining that "I don't get no respect" was my favorite comic, Rodney Dangerfield. Just like Rodney, I have a stock in my portfolio that just can't seem to get any respect from the investment community. That company is Gilead Sciences (GILD). Even though GILD pays a 3.5% dividend yield, sports a reasonable valuation of 18.7X earnings, has a lower than market beta at .7, has developed a drug that cured Hepatitis C, and now has proven to have an effective therapy against covid 19, the stock just can't seem to get traction. I first wrote about Gilead in a post called "Handyman Investing" on April 27, 2017.  In that blog, I complained about how Gilead had cured Hep C but the stock was not rewarded because of the loss of revenue from cured patients. Today, the stock market is in rally mode largely due to the good news that Gilead has a drug called Remdesivir that has shown to be effective against corona virus. At the time of this writing, the Dow is up about 500 points or about 2% mainly on news of the positive clinical trials. Remdesivir is not a new drug, it was developed to treat the Ebola virus but was not proven effective. Remdesivir has been used to treat coronaviris since the outbreak began in China through goverment regulated clinical trials with anecdotal positive results. When the pandemic reached the US, sick patients needed to be enrolled in FDA trials to be treated. It takes time for the trials to produce reliable results and that is why the good news has been delayed. People who contracted corona virus and live in smaller communities were not eligible to receive the drug because they were not part of the study which typically is performed in major medical centers.  I believe that people all over the world are desperate for good news after 2 months of isolation and depressing news. That is why the news from Gilead Sciences has lifted spirits and markets. It also doesn't hurt that interest rates are virtually zero or lower in real terms. Anyone looking for a return on their money MUST be in stocks. That being said I expect investors will experience additional pain this year when stock markets test their recent lows. As for Gilead, even though they are riding high on todays news, don't look for huge gains for them because sales of Remdesivir are nonexistent-they are currently giving the drug away for free. Aretha and Rodney, who both have passed are surely smiling on the company knowing that R-E-S-P-E-C-T is more valuable than anything.