OT re: biogenetic technology and nanotechnology
I recently started buying BBH and IBB, the biotech index trackers. I consider these to be LT holdings. Biotech, IMO, is finally growing up, becoming a real industry, with real products, real sales, and real profits. Amgen, with recent acquisition, is now in the same class as the BigPharm companies. The old, established drug companies, more and more, are finding that the only way to have a pipeline, is to buy it from a biotech company, either through partnering or outright purchase.
This is one of those Transforming Technologies, more important than semiconductors or electricity or railroads. Now, when the sector is out of favor, and stocks in general are out of favor, now is the time to be buying these stocks. I use the Exchange Traded Finds, to avoid the event risk inherent in buying individual stocks.
The basic technology of biotech, is going to serially take over many Old Economy sectors: first pharm, then agriculture (unless the Luddites win the propaganda war), then the energy and chemicals industries, then construction and general manufacturing. If you want to build anything, or change any molecule into another molecule, there is probably a living organism who already knows how to do it, in a process refined by 3B years of evolution, and do it far more efficiently and precisely, than any other conceivable method. Also, the machinery is self-repairing, and self-replicating. Once we learn to harness these processes, it will Change Everything.
In addition, this technology is unlikely to become a commodity. Everything is being patented, the products and processes.
Caveats:
1. nanotechnology is still BlueSkyStuff, about where biotech was 20 years ago.
2. biotech has gone through two Bubbles in its brief history (1991 and 2000). When they are in favor, stock prices become absurd. Those times are selling opportunities. The 1999-2000 Bubble may not have fully deflated yet.
3. it is so expensive to develop a process, or a product, that most companies (even big ones) depend for all their profits on 1-3 products. Most biotech companies aren't making profits yet, and most of them are not complete companies, lacking marketing/sales, lacking the ability to jump through the FDA hoops, lacking financing, lacking other essential skills. So there is huge "event risk" in this sector. Even after a product is on the market, and is a big success, the risk isn't over. In the last few years, many products have been withdrawn from the market, for safety issues that weren't discovered until millions of patients had used them. So, at any time, any blockbuster drug can change into a huge unmeasurable liability.
4. This is a heavily regulated industry, far more than the semi industry is. So all these companies are at the mercy of bureaucrats with half the I.Q. of the people running biotech companies. As always, they do a lot of random stupid things that add a lot of expenses to the final products. |
