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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: BulbaMan who wrote (2863)	2/9/2001 2:18:17 PM
From: Robert Rose	Read Replies (1) \| Respond to of 52153

Seems to me the last time a flurry of funds/stock baskets targeted sectors (iih and bhh for example) that marked the top. One does have to wonder how long the bios can stand up (relatively intact) to this current onslaught.....

To: BulbaMan who wrote (2863)	2/9/2001 11:29:25 PM
From: Doc Bones	Read Replies (1) \| Respond to of 52153

The new, wisely-pruned Nasdaq biotech index is a most welcome addition, along with it's matching trading ETF, as Peter has pointed out: Message 15226580 Message 15226799 Thanks to hmpa for discovering that the new symbol for the index is NBI.X, replacing IXBTX The corresponding ETF (Exchange Traded Fund) is IBB. ETFs are stocks that track a given index, the most popular of which is QQQ, which tracks the Nasdaq 100 - NDX.X The Indexes and ETFs are apparently all weighted by market cap, which is the biggest drawback for matching 'our' type of stocks. QQQ has active option trading, I don't see options yet for IBB, and don't know what the plans are. Because the ETFs trade just like stocks, they offer many conveniences. I confess to having used BBH, the old attempt at a biotech ETF, as a hedge. It's main value now is probably as a satire of what a biotech fund should be. ----- Before ETFs and other instruments were created, in order to 'bet' on an index you had to: 1) Open a commodity broker account 2) Buy 'Futures' - agreement to deliver the cash value of the index on a certain day, rather than the index itself. 3) Always have the value of your holdings 'marked to market' at the end of the year. That is you paid capital gains tax for the year even if you still held the future. (Tax treatment of ETFs is something you should ask your tax pro about.) Also the delivery rules on commodities are rather arcane, occasionally leading to some poor soul waking up with 30,000 pounds of pork bellies on the front lawn <g>. ---- I believe I see our friends at The Street.com up to some of their old mischief regarding biotech: But the narrow focus of the fund, along with the some of the sky-high valuations of many Nasdaq-traded biotech companies, might make some investors skittish, says Morningstar senior editorial analyst Peter Di Teresa. Although the Nasdaq biotech index is down some 7% so far this year after rising 23% in 2000, Di Teresa notes that the price-to-earnings ratios of many biotech companies in the index are still extremely high. "I've certainly talked with active managers on the biotech side, and they did see some buying opportunities," says Di Teresa. "But we're still talking about some very, very high multiples." <snip> While the run-up over the past few years has been extensive, other analysts note that there will always be investors who want exposure to red-hot sectors no matter what the cost. "I think it's going to be very, very popular, just because of the run-up in biotech," says Salomon Smith Barney ETF analyst Kevin McNally. "You know how investors always get in at the top." <snip> thestreet.com (Thanks, BulbaMan) Apparently the ETF will mainly be bought by insane gamblers who still have money left over from the Internet debacle (TSCM, e.g.?), and insist on taking the longest shot in town, in a desperate and doomed attempt to get it all back in one plunge. Aside from that it's a very objective article. Doc