Biotechnology is a sector where traders are looking for huge profits. For experienced traders (smart money), this sector can provide opportunities for diversification with greater risk and greater returns, but for those who speculate on this, such transactions may be unnecessarily risky. We urge you to follow the recommendation of wide diversification ( and the mandatory calculation of the risk for each such transaction.
Because companies in this sector can be very complex, many traders seek advice from large financial institutions. The buy and sell ratings compiled by these companies can be used as a tool to determine whether to make an investment decision, but after analyzing the history of the major analytics providers in this market, their past recommendations and results, we see that this is not enough to justify entering a deal by a rational investor. Everyone should clearly define for themselves goals for the share, entry, exit, risk and retention period in their portfolio of such instruments.
It is also worth understanding that the in the market of Biotech companies is caused precisely by speculators who want to make quick money and jump off the train as soon as positive / negative news appears. Example - Deferring drug approval by 3 months exposes a 10, 20, 40 percent or more decline in market share value. Whether the financial indicators of the company have changed - no, whether they were refused - also not. Stocks are “weakening” amid expectations, less confidence in success (or they can't stand their nerves), and only those who know what they are waiting for and are ready to fight for it looks at changes in quotations in the short term less painfully.
As for our opinion on the sector, we would refer to the promise made by President Joe Biden during his first press conference in his new role. He noted that research spending in the 1960s exceeded 2% of the country's gross domestic product. Today it is less than 1%. Biden has vowed to change this to get ahead of China.
“We're going to invest in medical research, cancer, Alzheimer's, diabetes, the industries of the future — artificial intelligence, quantum computing , biotechnology,” Biden said. “We are going to make real investments. China is far superior to us in investment because their plan is to own this future. "
I believe in the near future there will be an opportunity to gain a pool of assets from biotech, when many (especially those who have just come to the market) investors and traders begin to get frustrated and turn away from it.
If you have time check our expectations and make a review on it if you expect the same
Thank you for your comment, I will add an update to the chart a little later.