The second quarter of 2009 was filled with gains and plenty of plain. After looking at the quarter’s winners and losers, one thing is obvious, biotechs can make or break your portfolio.

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