biotech valuation:
After bottoming in July, biotechs rebounded, and then stalled. BBH
stockcharts.com[h,a]dahlnyay[dd][pb50!b200!f][vc60]&pref=G
(biotech index ETF) bottomed at 64, but hasn't been able to stay above 90, in spite of continuing good news. Amgen is by far the largest component of the index, yet yesterday's news couldn't push BBH over 90.
Looks to me like investors have decided the biotechs have had a big run, valuations are getting stretched, and good news is being ignored. Biotechs should, logically, be countercyclical stocks, because their products get bought no matter what macro conditions are. But the track record of the stocks says they are very sensitive to the overall market mood. Valuations of biotech stocks expand and contract dramatically, based on macro events that really have no impact on sales/profits/future products of biotech companies. Irrational, but a consistent pattern.
I've been selling my BBH in small lots, in the 89-91 area, for a couple of months, and I sold the last of it yesterday. Will buy it back, at 85 and every 5 points on down, not being fully invested until/if we are retesting the July lows. |
