What the Big Trend in Biotech Looks Like
By Rob Fannon, editor, Phase 1 Investor
March 9, 2009
The unique claim we made about biotech stocks isn't much of a claim anymore.
About a month ago, I wrote about the "defensive" characteristics the biotech sector has taken on in the past few years. For proof, I showed you how the S&P Biotech ETF (XBI) was actually up in price from February 2007 to February 2009.
It was an amazing accomplishment for what is normally considered one of the riskier sectors of the stock market. Real estate, oil stocks, tech stocks, gold stocks, and corporate bonds couldn't make that claim.
But have a look at an updated chart of the XBI:
Yep... the worst stock market since the 1930s has taken down the biotech bull market. The XBI is down a few percent in the past two years.
Other biotech ETFs – like the PowerShares Dynamic Biotech & Genome Portfolio (PBE) and the Biotech iShares (IBB) – are at new lows as well. All biotechs are "swimming upriver" right now. Even the best and strongest, like Celgene and Genzyme, are at multiyear lows.
Of course I'd like to see biotech stocks running higher and higher each day. That makes my job much easier. But I've got to set my bias aside and objectively look at the facts. And the facts are biotech is struggling right now… not nearly as much as highly leveraged retailers, real estate developers, and banks, but struggling nonetheless.
So if you're interested in biotech stocks how do you play this weakness? I'd avoid the ETFs for now. Only true big hits will do well in this environment. (Here are three areas to look for the next biotech blockbuster.)
The big trend in biotech isn't down… but it isn't "up" anymore. Consider shorting the weakest of the bunch and stick to the hottest areas for your long bets.
Good investing,
Rob Fannon
P.S. As I explained last month, I expect the biggest opportunity in biotech (or the entire stock market for that matter) will arrive on March 30. By this day, one company will announce test results for a new drug that could create the single biggest return of any investment I've ever found.
One drug expert calls the potential market for this drug the "biggest untapped goldmine in the industry" and speculates it could be worth $10 billion per year. But there's not much time to get in. Click here for the full details of the situation. |
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Gun manufacturer Sturm, Ruger up 64% this year. |
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Global slowdown slams shipping stocks... J.B. Hunt, General Maritime, FedEx, and Burlington Northern Santa Fe at new lows. |
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Mall REITs make another leg down... Simon Property and Macerich hit new lows. |
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In the Crux... Major world currency is on the precipice. |
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|
Last |
Change |
52-Wk |
| S&P 500 |
687.22 |
-1.31% |
-48.47% |
| Oil (USO) |
27.15 |
-1.67% |
-67.41% |
| Gold (GLD) |
91.10 |
+2.37% |
-6.77% |
| Silver (SLV) |
12.97 |
+1.48% |
-37.11% |
| U.S. Dollar |
89.06 |
+0.14% |
+21.20% |
| Euro |
1.26 |
+0.09% |
-17.65% |
| VIX |
49.31 |
-3.18% |
+100.45% |
| HUI |
284.55 |
+4.57% |
-43.29% |
| 10-Year Yield |
2.84% |
-0.17 |
-0.66 |
|
| Company |
Sym |
Industry |
Apex Bioventures |
PEX |
holding company |
Sturm, Ruger |
RGR |
guns |
|
|
| Company |
Sym |
Industry |
Nike |
NKE |
athletic apparel |
Massey Energy |
MEE |
coal |
Simon Property |
SPG |
mall REIT |
Arctic Cat |
ACAT |
ATVs |
Sherwin-Williams |
SHW |
paint |
Kimberly-Clark |
KMB |
consumer prod |
3M |
MMM |
conglomerate |
Mohawk |
MHK |
flooring |
Weyerhaeuser |
WY |
paper products |
Aflac |
AFL |
insurance |
Edison Intl |
EIX |
utilities |
Burlington Northern |
BNI |
railroad |
J.B. Hunt |
JBHT |
trucking |
Unilever |
UN |
consumer prod |
ACE |
ACE |
insurance |
Dr. Pepper Snapple |
DPS |
beverages |
General Maritime |
GMR |
shipping |
American Express |
AXP |
credit cards |
Eastman Kodak |
EK |
photo equipment |
Waste Management |
WMI |
waste mgmt |
Apartment Invest |
AIV |
apartment REIT |
Gannett |
GCI |
newspaper |
Starwood Hotels |
HOT |
hotels |
Brookfield Asset |
BAM |
holding company |
FedEx |
FDX |
shipping |
Walt Disney |
DIS |
entertainment |
T. Rowe Price |
TROW |
asset mgmt |
Allstate |
ALL |
insurance |
General Dynamics |
GD |
aerospace |
Capital One |
COF |
credit cards |
BB&T |
BBT |
bank |
J.C. Penney |
JCP |
department store |
Eni |
E |
Big Oil |
AXA |
AXA |
insurance |
UBS |
UBS |
bank |
Gartner |
IT |
research |
Equity Residential |
EQR |
residential REIT |
Delta |
DAL |
airline |
H.J. Heinz |
HNZ |
food products |
AstraZeneca |
AZN |
Big Pharma |
eBay |
EBAY |
online auctions |
Covanta |
CVA |
waste mgmt |
Jones Lang LaSalle |
JLL |
real estate |
Hewlett-Packard |
HPQ |
technology |
St. Joe |
JOE |
real estate |
Boston Properties |
BXP |
commercial REIT |
Procter & Gamble |
PG |
consumer prod |
Macerich |
MAC |
mall REIT |
Leucadia |
LUK |
holding company |
Kroger |
KR |
grocery stores |
Raytheon |
RTN |
aerospace |
Microsoft |
MSFT |
software |
|
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