This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Don't Hate Josh Brown For Calling Biotech a Bubble. Learn From Him.

By: Adam Feuerstein | 03/24/14 - 04:17 PM EDT

Stocks in this article: GILDCELGNBIIBBALXNBIIBAMGN

The best commentary on the biotech meltdown today came from an outsider. Josh Brown, professional wealth manager, author and all-star blogger, says biotech is a bubble.

If you want to understand why your beloved biotech stocks are tanking, you must read Brown's blog post right now. Hell, if you already read Brown's post earlier today, read it again. 

You've heard a lot of talk about the "generalist investor" and their collective impact on biotech stocks. They bought up sector to incredible heights, but now it looks like the generalists are selling it down -- at least a little bit. 

Brown is NOT a biotech expert. He isn't going to analyze clinical data or explain why immuno-oncology is the new treatment paradigm in oncology. Brown IS an astute market observer from outside the biotech clubhouse. He provides a fantastic perspective for those of us who wake up thinking about biotech stocks and don't stop until our head hits the pillow. In other words, we're too geeked out about all this stuff to understand how 99% of investors think. [Hint: Generalist investors don't think like us, but since they control most of the investment capital and decide the direction of the markets, it's probably a smart idea to know what they're doing.]

You may not agree with Brown's analysis. You may get offended. That's fine. But guaranteed, you'll learn something, regardless. Read it

More selling today. The Nasdaq Biotechnology Index (NBI) lost another 3%, adding to March losses. Here's the updated chart:


IBB Chart
IBB data by YCharts

Gilead Sciences GILD managed to close up 6 cents to $72.13 so maybe a signal there that investors will start to differentiate the strong performers from the over-valued, bubbly junk.

Here's a  chart of big-cap biotech performance YTD:




CELG Chart
CELG data by YCharts

Here's some intra-day biotech commentary from the market strategists at ISI Group:


Biotech, spec pharma and beta continues to be sold today and have seen consistent theme with flows-generalist/long only selling in Biotech without a real incremental bid yet (buyer's strike continues), more dedicated hedge fund long selling in Spec Pharma and IBB volume continues to be very high (Friday was biggest volume day since '05 and looks like will easily surpass that today) as hedge funds continue to hedge out Biotech longs w/ IBB and massive HC inflows into ETFs YTD is unwound.


ISI's Mark Schoenebaum sent out another buy-side sentiment survey today, with 59% of respondents predicting biotech will outperform in 2014. Twenty-seven percent said the sector will be in-line, with 14% forecasting underperformance. On an absolute basis, most respondents picked the major biotech indexes to be up 10-15% this year, Schoenebaum said.

Until tomorrow... 




Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.

Markets

DOW 16,713.64 +252.32 1.53%
S&P 500 1,953.13 +26.02 1.35%
NASDAQ 4,455.15 +72.3030 1.65%

Adam's Tweets

Brokerage Partners

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
Real Money Pro

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Trifecta Stocks

Trifecta Stocks analyzes over 4,000 equities weekly to find the elite 1% of stocks that pass rigorous quantitative, fundamental and technical tests.

Product Features:
  • Model portfolio
  • Trade alerts
  • Recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
Stocks Under $10

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Dividend Stock Advisor

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Breakout Stocks

Bryan Ashenberg, using sophisticated stock screening and fundamental research, identifies potentially explosive small and mid-cap stocks.

Product Features:
  • Model portfolio
  • Small-cap and mid-cap focus
  • Intraday trade alerts
  • Weekly roundups
Options Profits

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
Top Rated Stocks Top Rated Funds Top Rated ETFs