So, that means that you wouldn't invest in any biotech?
My recommendation is to find a scientist/analyst who you respect. Follow her/his recommendations until you see that they know what they're talking about, and that they have insight with respect to which management teams are known for BS and which are known for work and productivity.
Why do I recommend such? The entire biotech industry has a market cap smaller than that of Merck. Take out Amgen, Genentech, Chiron, Genzyme and a couple of others, and the industry is a small fraction of Merck. The focus for the past three years has been on near-term projects. However, investments are now turning to patents which will pay mid-term. If you look at the value of patents that will stake out territory in the ten year time frame, the value of biotech dwarfs that of Merck. Take a look at the business plan of Incyte Pharm or ArQule.
There's no hurry, but you might like to start your education. I agree with you, that one should invest in what they know about. However, given that biotech is going to thrive big-time, why not take steps to participate rather than run? Your point is well taken that you would have been going "huh?" during the retracement to 50 from 60. I was going "huh?" when they recently dipped down to 30 for a hunk of cash in a follow-on offering. It's not a sector for the uneducated or the faint of heart, and, if you're not diversified, you're gambling, not investing.
Cheers! Rick |
