One year ago, the biotech stock indices peaked. The big genomics stocks actually peaked a week earlier, a harbinger of the carnage to come. At the time, our biotech mutual fund was 40% cash, 25% drug stocks, 10% health maintenance organizations and 25% biotech. (We shifted to 60% cash and 5% biotech within days of that peak.)

What happened in the intervening year?

What a Difference a Year Makes The biotech indices peaked a year ago. Where are they now?
	3/6-7/2000	3/7/01	% change
AMEX Drug Index (DRG)	292.33	392.19	34.2%
AMEX Biotech Index (BTK)	794.53	555.75	-30.1
Merrill Biotech HOLDRs (BBH)	241.81	138.91	-42.6
Nasdaq Biotech Index (CXBT)	1596.53	917.91	-42.5

Was he subconsciously aware of the anniversary when our beloved Cramer wrote Wednesday, "Sit on your drugs, dump your biotech"? I was going to write a little squib in observance of the anniversary anyway, but JJC gave me added incentive.

Bounce-calling (let alone bottom-calling) is a tough game and Crames nailed me a month ago when he argued that biotech was headed down. Despite the publication of the human genome. Despite the progress that biotech companies keep making. Despite top analyst Rachel Leheny's comment at the Lehman conference last week, "The fundamentals in this group are wonderful."

And they are. The best biotech companies are better than they were a year ago, and yet their stocks are down 30% to 50% or more. Meanwhile, the drug stocks have peaked and Wednesday fell decisively below their 200-day moving average. I looked at the last three columns I wrote for this august site and biotech is still above where it was two months ago when I argued with Crames that it bottomed on Jan. 8. (Note, the drug index is not above that level.)

Still Holding Biotech is still ahead of where it was two months ago
	1/8/01	2/7/01	2/13/01	3/7/01
AMEX Drug Index (DRG)	404.43	414.58	413.92	392.19
AMEX Biotech Index (BTK)	505.24	593.81	583.12	555.75
Merrill Biotech HOLDRs (BBH)	137.44	150.41	147.95	138.91
Nasdaq Biotech Index (CXBT)	888.08	1010.79	997.91	917.91

Will biotech hold here? Is it still the canary in the coal mine that I and others think it has become? Or is JJC right and it has further to fall?

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I don't know -- but the only thing hurting my sector is psychology. Ain't no inventory corrections or demand slowdowns in biotech. Not much in the way of earnings, either, but if investors are shifting out of the drug stocks, the move from value stocks back to the Nasdaq appears to be underway. Whether biotechs will do as well as semiconductor stocks in that shift, I can't tell. But biotech sure held up better in the interim.

If my favorite gurus are right, we have another two weeks of misery before the market gets a lift. (I had assumed the market would take another hit around tax time, as it often does. But maybe not this year.)

Having talked with some of my favorite institutional investors this week, I know they dumped most of their biotech stocks and are hiding out in pharmaceutical stocks. Now if those pharmaceuticals are starting to take a header while cash piles up on the sidelines, where are my institutional friends gonna go?