It's Time to Trust Your Biotech Portfolio

Several fund managers told me they were using intraday weakness to add to core positions in quality biotech names -- Genentech(DNA Quote), Gilead Sciences(GILD Quote), Celgene(CELG Quote) and Cephalon(CEPH Quote), among other stocks.

"We own Celgene and Genentech and we're not going to sell just because the market is weak," said one of these fund managers. "We're trying not to let the current market change our strategy, which is to pick good fundamental health care stocks.

"The volatility is going to affect our portfolio, but we have longer than a one-month time horizon," said another biotech-focused fund manager who is also trying to add to core positions.

As for trading in this environment, he says, "If we do any trading, we trade on the margins of our portfolio. If a quant fund is going to drive up one of our positions 20% so that it approaches our price target, we will sell some to take advantage of it."

Having a time horizon of one year or more on biotech investments makes navigating this summer's volatile markets easier. It's been more stressful and difficult for those with shorter time frames.

One stock trader I spoke with, who focused almost exclusively on the biotech sector, said he had sold off most of his peripheral stocks while keeping a core group of favorites.