Biotech specs turning around?
It’s been a lousy summer for most biotech investors, with the broad biotech sector down some 15% from its highs in February (see chart). I invest in several companies in the biotech and pharm sectors. Most of these are specs, i.e. the companies typically have no earnings and no products, but I am a patient speculator these days and am prepared to hold a position until my original investment thesis plays out. So the last six months haven’t concerned me awfully much. Nevertheless, I much prefer to see my portfolio balance holding steady or trending upwards while I patiently wait; it helps me check my urge to act emotionally, which is never a good idea. So I was pleasantly surprised to find my speculative biotech holdings significantly outperform both the broad small-cap market and the biotech sector (the BTK rose ~0.5%) today. This happens occassionally for no apparent reason and with no portent. But I’ve also witnessed a one-day “reversal” like today’s mark the beginning of a period of recovery for the sector. The only factor that makes me guarded in my optimism for a sector turnaround soon is that it’s vacation season for the some of the “smart money,” and today’s volumes were less than earth-shattering. Well…that and the record-high energy prices, and the escalating tensions in the Mideast, and in North Korea, and in Africa…. Man, was it hot here today.
