Get Ready for 566% Gains or More
in Biotech
By Dr. Steve Sjuggerud
April 18, 2008
When biotech stocks get going, they go absolutely nuts...
In the early 1990s, biotech stocks as a group had an extraordinary run – good for 1,347% profits. Of course, if you held the right names, you'd have done even better.
And that big run wasn't the only one... In addition to that quadruple-digit rally, since 1983, biotech stocks have exploded higher in four separate triple-digit rallies.
Once a big move starts, the gains just get ridiculous. Biotech stocks as a group are at three-month highs right now... We could be on the brink of the next great move.
Of course, along with the outrageous profits, biotech stocks have spectacular busts. Biotech stocks as a group have lost 50% of their value on four separate occasions.
But biotech has been ignored since its last major peak – which occurred near the dot-com mania in 2000.
On March 6, 2000, the Nasdaq Biotech Index was around 1,600. Today, it's around 800 – still down 50% from its peak more than eight years ago.
It's been an especially long period of no returns in biotech. We're due for a big move. Innovation hasn't stopped in those eight-plus years.
Longtime readers of mine know that I like things that are 1) cheap, 2) hated/ignored, and 3) in an uptrend. Biotech is cheap. It's definitely ignored. And the biotech indexes are now up 10% off their lows of just a month ago. It could be the beginning of an uptrend.
Our in-house Quant Trader, Ian Davis, crunched the numbers for the past biotech booms (based on the Datastream Biotech Index), and here's what he found...
Average Expansion Length |
2.6 years |
Average Expansion Gain |
+565.5% |
Average Contraction Length |
1.9 years |
Average Contraction Loss |
-46.1% |
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It's been a long wait since the last major biotech stock boom. I think the wait is just about over...
If you're interested in potential 565.5% gains over two and a half years (that's the average gain over the last five biotech bull markets), then you really ought to consider getting on board in biotech stocks...
Good investing,
Steve
P.S. You can play biotech "generically" through a mutual fund or an exchange-traded fund. But I think there is much better way... You can potentially make substantially bigger gains... quadruple-digit percentage winners are possible. Please read this report to learn how.
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ANOTHER LOOK AT THE GOLD/HOG RATIO
The business of stuffing landfills continues to suffer.
On Thursday, Harley-Davidson announced it would ship 25,000 fewer motorcycles this year than it did last year. Sales declined 13% in the first quarter, layoffs are on the way, and shares sit at a new low.
This news is further confirmation of a trend we started writing about last year... As the U.S. economy goes from "solid" to "less solid," the price of basic stuff with worldwide demand – like coal, crude oil, food, and gold – will rise versus expensive boats, motorcycles, swimming pools, and $100 shirts.
We even ran a series of ratios explaining the "real stuff" vs. "landfill stuff" situation. Our centerpiece pitted the ultimate real asset, gold, against the ultimate American icon, Harley-Davidson. When we showed you this ratio six months ago, it was around 17 and trending higher – the price of gold was far outperforming Harley shares.
Since then, Harley has lost an additional 23%. Gold has gained an additional 19%. The ratio is now 26... and the flight to real assets continues.
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Copper jumped to a record in London [on Thursday] on speculation a strike in Chile and mining disruptions will reduce supplies. Tin also rose to an all-time high.
Codelco, the world's largest copper producer, halted output at two mines yesterday after workers went on strike.
Rio Tinto Group reported lower first-quarter refined copper output, including a 21 percent drop at Chile's Escondida, the biggest copper mine. Copper has climbed 32 percent this year.
Tin jumped $150 to $21,625 a ton after climbing to an all-time high of $21,700.
The UBS Bloomberg index of 26 raw materials has risen 21 percent this year. |
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Commodity prices continue to move higher and once again the world is focusing its attention upon the weak US dollar.
We, however, believe that there is far more at work here than a mere weak US dollar; we believe that there is very real, long term, continued demand for most commodities needed by consumers in China, India, Asia, Africa et al who are leaping full scale from what have been heretofore 17th century lives into those of the 21st century.
It is for this reason that copper is putting its all time highs to test even as the US economy remains mired in recession.
...Recession may be the order of the day here in the US, but it is not the order of the day anywhere else... and certainly is not the order of the day in Asia. |
– Dennis Gartman,
The Gartman Letter |
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