poodle,
Similarity between Internet and Biotech is fantastic.
I think that is exactly the way to think of the biotechs right now. Think of MRK as the bricks and mortar, CRA as a biotech version of the dot.coms. (I'm choosing CRA because it's maybe the most extreme example. I've - alas - never held it, although I will confess to still holding HGSI, INCY and GLGC.)
Is AMZN "worth" its current market cap? Who knows? Is CRA worth its current market cap? Who knows? Ask me again in five years and I'll likely be able to give you a better answer. (If you force me to answer right now on CRA, I'd say "no it isn't").
So what is a poor value-oriented biotech investor to do? Lie back, shut your eyes and enjoy it, is one reasonable alternative. This means picking stocks with good "news flow" and not ever looking at their market caps.
So what will prick the bubble? The gene therapy death and fuss would have been enough to tank that whole sector a year ago. It barely seems to have had any impact at all. We haven't had a high-profile phase III failure for a while, but those aren't going to touch the genome stocks anyhow. Lot's of suckers (er, people) haven't heard about biotech yet - look at Kramer at TheStreet just about to jump on board.
Just as the internet bubble has never really burst, so the biotech bubble may conceivably have a long way to go. Again, who knows?
Personally, I've set a "dollar cap" on my stock portfolio, which means I'm supposed to sell stuff each day I go over the limit. Fortunately so far, I haven't fully got around to doing it yet. <g>
Peter |
