Hello Trevor,
As a private investor (and a Yankee) with about thirty years of investment experience, and who also learned a bit about investments from my father who had even more experience, I would respond to your query as follows: Your thesis that biotechs will go into the tank if and when the market crashes is, of course, correct. By crash, I am referring to a 1929 or 1987 type cataclysm. But your premise that such a crash is likely soon is incorrect.
The more usual situation and much likelier scenario is for particular sectors (e.g. network stocks: ASND, CSCO, CSCC, FORE, COMS) to get overheated and then correct while this money then flows from the overvalued sector into undervalued sectors (e.g. biotech). As long as the ENTIRE market is not in a bubble (which decidedly is not the case today), I think we need not be preoccupied with fears of a "crash".
Remember that bull markets scale walls of worry. With the market at historically high levels, there are many like yourself who are worried. Bear in mind that the US economy is also historically good, with inflation in check and unemployment at low levels. Keep in mind also that this is a liquidity-driven market. These pension fund dollars must find the best havens for safety and longterm return on invested capital. Equities have always outperformed bonds over the longterm.
So what are you waiting for, Trevor? A cataclysm? It would be far wiser to seek out the best values in your chosen sector, the biotechs, and begin to put your money to work there. Suggest you diversify a bit or you might consider a mutual fund.
And regarding the retired Judge's fears about massive liquidations of mutual funds. I believe that the government learned a lesson about such redemptions in 1931 (then the fear was that everyone would take their money out of the banks all at once). The response was to declare a "bank holiday". Even if such a "mutual fund holiday" does come to pass, it wont be the end of the world.
Just save a little cash to invest for such moments. But don't be precoccupied expecting one to happen.
Be brave, Trevor. Invest in the future. Your courage will be rewarded.
Sam |
