Mike, the point is well taken, but hard to accomplish in the real world. For example the AMEX Biotech Index (^BTK) was about 100 on 8/31/98, just six months ago. Recently, it climbed above 196 on the last day of January. So, an index buyer with good timing could have nearly doubled his/her money in five months.
In the real world, to benefit from these cycles you have to get out at a high and wait. Having been through a few of these, I can say that's very hard to do. The last three steep rallies came out of nowhere in January '96, August '97, and September '98. Their durations are dissimilar and news-driven. Sometimes the expected news-drivers, like the '98 Hambrecht & Quist Healthcare Conference fall flat, or even hurt the sector.
To examine your news-driver, that Y2K fear will cause a decline in the second half of this year, I see a couple alternatives. One is a general market decline and the other is a sector rotation away from computer technology, perhaps into biotechs. What would it take for a fresh Internut millionaire to buy and hold a third-tier biotech through six years of clin trials? -:) (Note: Bill Gates excepted. He has been diversifying from MSFT into biotech for some time.) |
