biotech investing

Remember the biotech bubble talk?

As we mentioned in our Market News section in March 2014, there never was a bubble.

Bearish fools were convinced the end was nigh for biotech names, we noted at the time. They even talked down the iShares NASDAQ Biotechnology ETF (IBB) from $270 to less than $210 in no time at all. But smart investors -- like you and I -- jumped on the dip for one simple reason…

There was no bubble… and 10,000 drivers of the biotech boom were retiring by the day for 20 years. Better still -- technically -- the IBB was overdue for a bounce off the lower Bollinger Band and an oversold read on Williams % Range. The moves on MACD and DMI were wildly unsustainable, too.

We even called for the IBB to rocket to $300 a share, as laughable biotech bubble headlines ran amok, ignoring one of the biggest drivers of biotech names – baby boomers. Those folks retiring by 10,000 people by the day for the next 20 years were -- and still are -- driving growth.

Today, the IBB traded at a high of $276… and we still strongly believe it’ll hit $300, perhaps even $325 before the year is out. While The Cheap Investor never officially issued a buy recommendation on the IBB ETF, we did hear that some of you bought, sitting on $64 gains in no time at all.

“Investors are enamored with the fact that for much of the industry, “earnings are just growing at phenomenal rates that you really can’t find in other industries,” said Ziad Bakri, who analyzes biotechnology companies at mutual fund firm T. Rowe Price Group, as quoted by The Wall Street Journal.

What’s funny is that the herd and the bearish headline writers are now jumping back into the biotech names they once bashed. It’s just too bad they’re late to the party we’ve enjoyed.


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