[The Biotechs]
About six months ago Jon Joseph, an analyst at SSB, released an opinion regarding the semiconductor equipment manufacturing sector claiming a slowdown was eminent and the stocks in the sector were due for some very troubled waters. He provided his spin on the available data to support this thesis. The response on SI was swift...and predictable: the vast majority of participants, from experts down, poured scathing words on Joseph and provided clear and persuasive evidence how mistaken he was. We were pummeled with evidence showing how this semiconductor cycle would extend well into 2003, how many of the 2nd and 3rd tier companies were improperly valued, and...how in God's name could someone be paid!!! for expressing opinions like that. In short, the guy doesn’t know what the hey he’s talking about. Sound familiar....?
Jon Joseph was CONVINCINGLY correct, if not for all of his reasons, certainly for the significant correction that has since occurred in the sector.
I submit that this scenario is worth contemplating for the current state of the biotech sector. Many of the most ardent proponents of the sector are defending the valuation in the sector in one form or another (the selective defense of stocks indicating specific valuation levels is now common on the biotech threads...as it was in the SEM sector this summer). Jon Joseph suggested the semis were due for tough times and was slammed. The recent suggestion that biotech continues to represent a bubble has similarly been met with dismissal and derision. And I can't tell you how many CEOs of SEM companies made harsh and belittling statements about Joseph. These were accompanied by their own rosy near- and intermediate-term forecasts (read: pipeline). Most of their stocks are down 60%+ from that point.
Analogous statements are now appearing from biotech CEOs.
Perhaps biotech investors feel their field is different...or that extreme prudence in stock picking will win the day. Again, that sentiment parallels previous opinions expressed in the SEM sector...where it would be difficult to find A SINGLE STOCK that hasn't lost 50% since the summer.
IMO, biotech investors should be very, very wary at this point. |
