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Biotech / Medical : Biotech Stock Picking - 2002
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To: michael_f_murphy who wrote (294)12/22/2002 9:46:49 PM
From: scott_jiminez   of 308
 
<<Tis sad year for biotech stocks that losing the least is exemplary>>

Indeed..but not at all atypical. So while Rick and Wilder deserve our kudos for their selections (my portfolio: -62%), the prevailing message for biotech investors remains as it has been for at least 15 years: the sector is cyclical (describing an extremely protracted down wave periodicity and extremely brief - but dazzling - up phases) as much as semiconductors or autos or energy.

This year's continuation of the biotech debacle gold plates my belief that investing in the sector does not require an understanding of specific drugs or the FDA nor is aided by postgraduate training in a specific biomedical discipline. An entire sector doesn't surge ~100% one year...and then plunge ~80-90% in the following years based on anything closely approximating fundamentals or drug development. And of course I may as well be referring to the events of the early 1990's as to more recent biotech collapse. The data from 1999->2002 simply displays a sequel, Biotech Debacle Redux, and this pattern is hardly played its course.

These stats personify the 'greater fool' approach to investing.

Successful biotech investing DOES require an exceptional eye for human herd-like behavior: it requires the discipline to totally ignore ALL of the real and/or perceived advancements in the field while waiting for evidence of the once a decade mindless run-up in prices.

And then it requires a highly disciplined, preset sell strategy once this bubble begins to inflate.

I don't possess this discipline.

I don't see evidence of it on SI either.

And my guess is that '03 will be another year to avoid the sector altogether.
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