Why Biotech Trumps Big Pharma In Our Portfolio

By John Linnemeier

Our three holdings--Geospace Holdings (GEOS), Geely Automobile (GELYY), and 3D Systems (DDD)--began to to perform better in April. I don't think there's much particular justification for most of this, other than the market's manic-depressive attitude toward these companies.

I've decided to buy iShares NASDAQ Biotechnology Index  (IBB), an ETF composed of a large number of biotech companies. Trying to buy individual stocks in this sector is pretty much a crapshoot, and, frankly, there's a good deal of insider information that we'll never have.

On the other hand, the sector, as a whole, appears to be on the upswing for various reasons. In my opinion, Big Pharma simply doesn't have enough new drugs in the pipeline, so the only way to fill it is by buying up smaller companies that have jumped through the respective regulatory hoops for their specific drugs.

The field of genetic engineering, in general, is finally beginning to bear fruit, and I believe may be a revolutionary economic force. I could buy individual stocks, like Seattle Genetics (SGEN), but in this area, at least, I prefer a more diversified approach.

The investments discussed are held in client accounts as of May 1, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

John Linnemeier

John Linnemeier

I'm a writer. The book "How an Average Man Lived an Adventurous Life" is my autobiography. I've spent much of

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