I'm always amazed at how irrational Wall Street can be. This is why I emphasize diversification so much, because one stock alone can often hop around without any good reason.

A perfect example is Gilead Sciences (GILD) which is one of my favorite Blue Chip Growth stocks. Last month, Gilead reported earnings that were two cents shy of Wall Street's expectations. The next day, Wall Street panicked and Gilead lost $5.67 a share which was a drop of over 10%. All that for a miss of just two cents. Think of it this way: A miss of two pennies caused a loss of 567 pennies. That loss valuation has a P/E ratio of over 280!

I saw no reason to panic because Gilead is an excellent stock. Here we are less than one month later and Gilead has made up everything it lost, and it's even a little higher than before the earnings report. All that panicking was a waste of time. In fact, as I write this post, the stock is inches away from another new high.

I first recommended Gilead in Blue Chip a little more than two years ago and we're currently sitting on an 80% profit.