Trevor, Good to hear from the old country. I think there are three very different scenarios for how the biotech sector would react to a Dow correction.
First, if the correction is mild and mainly focused on the Dow, then there could well be a rotation of money into small stocks and biotechs. This, I think, is what Henry predicts.
Second, if the overall market tanks sharply, there could well be a " flight to quality" and away from story companies with no earnings. This seemed to happen last June when the Dow caught cold, and the biotechs caught the flu. The selloff was broad and deep. It could be again.
Third, if the Dow correction coincides with some of the positive news releases Henry predicts for next year, the response could be mixed. Companies with cash flow from alliances and products that can cash flow in a year or two, should take off. The early stage companies, who are still five to ten years away from market, will be in trouble.
I think this last scenario is the most likely one, and I am limiting my investments to companies with good allies and products in phase 111 testing. I am also holding cash in the hope that there will be some bargains next year.
Good luck,
Roy |
