The short answer is that I am not so good
at judging when things have bottomed, so
my opinion is probably worthless. However,
I will be happy to rant about my position
on pharma versus biotech, and there may be
something for you to chew on in that:
_________________________________________
FSPHX is the health care fund, yes? Well,
my newbie guess is that long bond rates
will creep up slowly for the next several
years. Maybe back to 10% a few years from
now. The brightest economists cannot forecast
rates however, so the exercise is silly.
I have only watched rates fall for a long
time--and when I first started watching the
market much higher rates that what we have
here looked normal, why, my folks saved for
my College education by socking away savings
into banks CD's which paid as high as 12% in
the late 70's. When I got my mortgage loan
at 7%, that seemed cheap, and interest rates
on savings now look like an inflation and tax
adjusted big-fat-zero to me now at 4%.
But whether or not health care (and I assume
this sector is weighted mainly in big pharma)
will not just correlate to long term interest
rates. There is a more basic question at hand--
whether PFE and WLA and the others will grow
fast enough to support and PE of 60, or 40 or 20.
I have assumed, for about the last year, that
biotechnology companies will be the main source
for new drugs over the decades ahead, and these
companies will get a bigger cut of the pie as
they stop whoring themselves out for pharma. So
I have not bought into health care or pharma, but
instead have loaded up on the cheapest biotech
stocks I could find. This turns out not to have
lost me any money--I'd have done poorly in pharma,
but I am not as confidant now as I was when I
was buying these shares (unfortunatly it is hard
to undo what one has done--and I've become attatched
to the stocks I own--I feel like an 'investor'. This
is a naive mistake people make all the time, but
I find that I want the companies to succeed, I
increasingly expect it, and I find it very hard
to depart with the biotech stocks I've aquired.)
For sure, the terrific profits in big pharma make
it possible for the big drum firms to increasingly
do their own biotech research--and the small biotech
companies, suffering in a stock market that is not
at all interested in throwing money their way for
new financing, may just slowly starve and go out
of business. Scary stuff for me, but for now I am
going to stick with my microcap biotechs in the
hopes that we are at the magic inflection point for
a turnaround in that sector. |
