Slow and Steady Wins the Biotech Race

Dear Reviewer,

I am not telling you anything new by noting that the market is crazy-making these days. Despite all the naysayers out there who condemn biotech, I still can’t see any segment of the market — not housing, not industrials, not utilities, not technology, not transportation, not financials, not anything — worth investing in other than medicine and biotech because none of those other market segments is showing any possibility of growth, and none seems to be showing any signs of significant innovation.

There is nothing groundbreaking coming from the Googles, Apples, Facebooks, Microsofts or other techy companies that once took our breath away with innovative new offerings. Virtual reality goggles are a minor hit, but that sort of technology is going to play to the video game crowd instead of the mass market. The Internet of Things truly will change our lives, but the progression is slow and awkward and cumbersome, and there aren’t any great, sweeping revelations coming from a specific company worth investing in.

The automotive industry, which is in the midst of a revolution converting its products to electric drives, may be the most innovative industrial segment around, but if people stop buying cars because they feel poorer as the market declines, it will be difficult to make money there.

Everywhere I look, I don’t like what I see …except in the medical world.

Cheap oil should boost air carriers’ profits, but hedging on fuel takes away a lot of the potential gain.

Everywhere I look, I don’t like what I see.

Except… except in the medical world, where cancer cures are a real possibility…

Where stem cells will eventually stitch back together the broken necks and spinal cords of the tens of thousands of paralyzed people who suffer traumas every year…

Where companies can use gene editing to save the sight of children absolutely condemned to blindness…

Where a company like MyoKardia has a real shot at preventing heart attacks in people with rare diseases.

Everywhere you look in medicine, you see innovation, revolutionary new drugs in trials and, not to be corny about it — hope built on good science.

I am following dozens and dozens of tech and biotech companies in my Breakthrough Technology Alert portfolio, looking for true breakthroughs, and as I look and watch and mull, I am more and more convinced we are on the right track and that patience will pay off.

In the meantime, lots of good, strong biotech companies are incredible bargains. You know the old saying: When there’s blood in the streets, buy. I’m not sure if there’s enough blood yet, but there will be soon.

And we’ll still see profits and major upward changes in prices, but it will be based on news — exceptional news. A lot of just plain old good news that would have pushed our investments up is ignored in a retreat to pure safety and a rejection of risk.

To your health and wealth,

Stephen Petranek Signature

Stephen Petranek

The Daily Reckoning