Sometimes the best way to see where you are going is to look where you have been. Of course every financial commentator always covers his backside by telling you “past performance is not an indication of future returns,” just as he whips out charts of historic action.

With the second quarter in the history books, we can learn who were the winners and the losers and work to uncover any important patterns or indicators. The results may be surprising.

I will start with the top three gainers, all listed on the Nasdaq exchange.

Dendreon (NASDAQ:DNDN) wins top honors with a quarterly gain of 495%. The biotech company that was trading for just $2.55 per share in March is now going for close to $24 today after stretching as high as $27.40 in recent weeks. The surge came thanks to positive news from the company’s prostate-fighter Provenge.

The exchange’s next top gainer is MAP Pharmaceuticals (NASDAQ:MAPP) with quarterly gains of 481%. Its wealth-generating propensity came on the news that the company’s migraine drug met four critical endpoints. Most of the company’s movement came last month when shares soared from the $3 range to a high of close to $14.

Finally, the third-place winner, with gains of 340% is Fuqi International (NASDAQ:FUQI), a precious metal jeweler in China. As the country’s economy showed signs of strength, Fuqi surged from $3.31 to close to $20 per share.

Two drug companies and a gold player in the winners. If you visit TFN with any regularity, you are not surprised by the news.

How about the losers?

Earning the Nasdaq’s worst-performance award is Star Scientific (NASDAQ:STSI), a manufacturer of “less-deadly” tobacco products.

Its precipitous decline came after word broke the company lost a patent lawsuit against a behemoth competitor, Reynolds America. In just the first half of June, shares of the company dropped from over $5 to just north of a buck a share. In all, the company lost 79% of its value during the year’s second quarter.

Trailing closely is yet another biopharm player, Anadys Pharmaceutical (NASDAQ:ANDS). When word the company’s Hepatitis C treatments were not up to par hit the Street, shares began shedding value like a dog shakes off a heavy rain.

The company lost 73% of its value in the past three months.

Rounding out the Nasdaq’s losers is yet another biotech, Sequenom (NASDAQ:SQNM). It lost 72% of its share price after it announced “employee mishandling” of data made Down syndrome testing results unreliable.

Two more examples of the volatility associated with the speculative biotech industry. It is proof one news event can make or break these fast-moving companies, sometimes permanently.

Pay attention here

Finally, after compiling a list of losers for the NYSE, it is obvious those leveraged short ETFs are some of the most dangerous investment tools out there. Far worse than the default swaps so many investors love to hate.

When the markets surged from their March lows, the last investment you wanted in your portfolio was the Direxion Financial Bear 3X Short (NYSE:FAZ). Designed to use leverage to create gains tripling an intraday drop in the market, the ETF created losses of 77% for the folks that unwisely bought into the fund with a buy-and-hold strategy.

This is perfect proof that these funds are dangerous when not used properly and it exemplifies why no investor should hold a leveraged short position for more than a few hours, let alone an entire quarter.

As the math shows, even if you get the trend right, you can still lose an awful lot of money.

The last three months were filled with stories of great gains and strong losses. Most intriguing is the gap between so many biotech companies.

Pick the right ones (which we appear to be quite good at here at TFN) and you can make out like a bandit. Go with the wrong one and, well, the numbers speak for themselves.

For my take on what the current quarter’s list of winners and losers will look like, click here.

Source: The Second Quarter’s Biggest Winners… and Losers

• Sales of existing homes rose in July, climbing 3.1% to a seasonally adjusted annual rate of 5 million units. Sales were expected to rise by only 1.6%, according to economists surveyed by Thomson/IFR, The Associated Press reported. Prices were down significantly from a year ago, as the median price for a home sold in July dropped to $212,000, down by 7.1% from 2007.

• U.S. investment bank Morgan Stanley (MS) said yesterday (Monday) its Saudi unit signed the kingdom’s first swap agreement, a vehicle that allows foreigners to buy into listed stocks through intermediaries, Reuters reported. “Interest from international investors … is very high, and we expect to see a lot more interest in these swap transactions from investors around the world,” Craig Niven, a managing director at Morgan Stanley, said in a statement.

• Former Treasury Secretary Robert Rubin yesterday (Monday) joined Citigroup Inc. (C) as the company’s “senior counselor.” Rubin will give up the chairmanship of the executive committee, which is being dissolved, but will remain on the board. Rubin served as an economic adviser to President Bill Clinton in 1993 and 1994 and was Treasury secretary from 1995 to 1999.

• Shares of Ford Motor Co. (F) touched their lowest price in more than 22 years yesterday (Monday). The company closed at $4.41 a share down six cents, or 1.34%, after earlier falling as low as $4.35 in afternoon trading.

• Crude for October delivery increased 52 cents to close at $115.11 a barrel on the New York Mercantile Exchange after a volatile day of trading, MarketWatch reported. The October oil futures contracts traded between $113.68 and $116.06 on concerns that a Caribbean storm could affect supplies. The National Hurricane Center said yesterday (Monday) that a tropical depression in the Caribbean has strengthened into Tropical Storm Gustav.

• Advanced Micro Devices Inc. (AMD) yesterday (Monday) announced it sold its digital-television chip business to Broadcom Corp. (BRCM) for $193 million. Broadcom hopes to return the loss-generating unit to profitability and expand its presence in the digital TV market, The Financial Times reported.

• A federal appeals court breathed new life into Star Scientific Inc.’s (STSI) patent lawsuit against R.J. Reynolds Tobacco Co., a unit of Reynolds American Inc. (RAI). The U.S. Court of Appeals for the Federal Circuit, based in Washington, D.C., ruled yesterday (Monday) that a federal trial judge in Maryland was wrong in deciding that Star Scientific’s patents were unenforceable, DowJones reported.

• Gold sank yesterday (Monday) in a quiet trading day as the dollar’s rise led to profit taking by investors. “I think gold is finding its base here. It’s mostly technical support holding prices above $820. Any dips below $820 are seen as a buying opportunity,” Carlos Sanchez, precious metals analyst at the CPM Group in New York, told Reuters.

Source: Global Investing Roundups Tuesday, August 26th, 2008