Peter,
Agreed, it was an old economy/new economy contest. I was simply overlaying the rationale of investors putting their money into things they think they understand. When biotechs look frothy, they can just about as easily research some pharmas and vice-versa (compared to a semiconductor stock, a different beast entirely). I'm not saying it's the right or the only theory, but a refinement of yours. Partly for that reason, I do not think that pharmas' and biotechs' stock price behavior should logically be that closely correlated except over the long haul.
Certainly my behavior goes somewhat this way. When I got defensive this spring, the first thing I bought was AZA. Later, I added NWL, but that's really defensive (based more on the track record of insiders), and I can't say I understand its business as well as that of AZA's. Of course, some would argue that AZA is sort of a hybrid biotech/pharma. For those folks, I'll only say that my second choice was Pfizer.
But I'm likely one the 95% of clueless people that Scott mentions, so maybe this thinking, which is hard to verify, doesn't count for much.
Cheers, Tuck |
