Lon R. kicks off this week's Biotech Stock Mailbag: "Adam, it gets better, right?"

Ha! Lon's email is bit cryptic but I assume he's referring to the poor performance of biotech stocks in 2016. [His email hit my inbox on Monday when the post-Brexit vote investing world looked bleak.] Lon, I wish I had re-assuring words for you, but I just don't know what the rest of the year will bring.

I texted a fund manager at a large (mostly long-only) healthcare fund, asking him to assess the year to date. He responded by sending me a picture of a man grimacing in extreme pain.

On a more serious note, he added, "I'm hopeful overall but I think we need to get past the election. Until then, the space will be choppy. Managed care deals are under attack and drug pricing will continue to be in the headlines."

Here are some additional responses from other healthcare investors to the same question :

"It's just a really pedestrian year. There is no Sovaldi, Imbruvica, Opdivo or Tecfidera out there, none of the large caps are really growing at historical rates right now and there aren't any big data readouts. It just feels like racing along in a sailboat only to have the wind die down. We're all looking to see if there are any signs that the wind is picking back up again."

"Exhausted! Part B, IPAB, Visium, Brexit, etc. etc."

"It's been a frustrating year in which macro factors often overwhelmed company-specific fundamentals. The overhang of diminishing [drug] pricing power is real, however, and that is going to be with us for a long time. The P/E re-rating downward was overdue."

"Winter is coming."

"Money [fund flows] is the key and it's still leaving."

"I think we have gone from one extreme to the other in a very short period of time and nobody has a great handle on what valuation metrics are most important. M&A hasn't occurred at a pace or to the magnitude required to signal a better buying opportunity and big catalysts have been a mixed bag of phenomenal to disastrous. Focusing on down-and-out stocks with sufficient cash to sustain terrible sentiment among small and mid caps, as well as catalyst-rich large caps has been at the top of my priority list."

"A lot of the excesses of the last two years during the biotech run-up have been worked out but that process is not over. The entire sector is undergoing a bear market. This type of damage typically takes a long time to repair. Expectations are being reset to a more realistic, normal level. It is now apparent that a lot of the assumptions that investors and sell-side made on the back of ever-increasing prices were widely optimistic if not outright preposterous... As of last Friday there has been 41 consecutive weeks of outflows out of healthcare/biotech funds. Unless you are a biotech healthcare specialist I would wait to see that trend stop or reverse before returning to the sector."

"In the first half of the year, biotech stocks were hit with a vicious one-two punch of drug pricing politics and volatile global macro trends. A hope for the rest of the year is that these two things can't get much worse."

"It was brutal in the beginning of the year but hasn't been so bad since. We are starting to see some truth in value in many stocks, several events this week gave a strong feel on that -- Tesaro, Ampion, Galena, Celyad, etc. Hopefully, we are transiting into a stock picker's market. I just hate when everything goes up or down together all the time."

"Mid-year 2016 feels a lot like mid-year 2000. The illusion of a brave new world is replaced with the mundane present."

"Forecasting little risk of pricing worries or pipeline disappointments, investors bid asset prices up to where there was very high risk to the traded paper. Now due to the perceived high risk-to-pricing paradigm and pipeline readouts, these same investors have sold the assets down such that the risk to the traded paper is substantially lower. Investors loved them in July '15, hate them in June '16. What's really changed? The prices are 50% lower today."

@adamfeuerstein I ask every summer...will you give a "halftime" report for your 2016 predictions?

— Joe Hetland (@joehetland) June 30, 2016

I only made a single prediction for biotech stocks last January. This was it:

"The five-year party which saw biotech stocks outperform the broader markets comes to an end in 2016. Good biotech science marches on, but negative fund flows, a continued flurry of negative headlines about drug prices and the presidential election all contribute to lousy stock performance overall."

@adamfeuerstein #NailedIt

— Colfax (@ColfaxCapital) June 30, 2016

Ya, I guess I did. So far.

@adamfeuerstein @joehetland any predictions for 2nd Half of 2016?

— Bio_Pharmer (@bio_pharmer) June 30, 2016

You want me to make more predictions and thereby risk ruining my chance at having a 100% hit rate on my current (and only) 2016 prediction? You must be insane!

All (bad) jokes aside, the direction of biotech stocks in the second half of the year hinges on fund flows. Investors have been taking money out of the biotech sector since last summer. If/when that trend reverses, biotech stocks will rebound.

The obvious follow-up question is, "What are the triggers which will entice positive and sustained fund flows into biotech?

Getting the election behind us will help. It's not like either presidential candidate has been biopharma friendly to date, but just knowing who's in charge removes uncertainty and tones down the political rhetoric. That will be a relief. Realistically, our government is in terminal gridlock regardless of who is elected president, so the odds of meaningful changes to drug pricing systems is small.

For sentiment-shifting events outside of politics, I wrote about the Eli Lilly (LLY - Get Report) Alzheimer's data coming in December. That's a very high-risk event but one that will be a game changer if positive. [My guess: It won't be.]

The next gene therapy clinical update from Bluebird Bio (BLUE - Get Report) in December is high on my list. And of course, M&A, if it roars back, will get a lot of investors excited.

Happy Fourth of July, everyone. For the numbers people out there, here's a snapshot of the biotech sector at the mid-year point:

The Nasdaq Biotechnology Index (NBI) is down 21% compared to a 2% increase in the S&P 500. The last time the NBI finished a year in the red was 2008.

The two biggest biotech sector ETFs -- iShares Nasdaq Biotechnology (IBB - Get Report) and SPDR S&P Biotech (XBI - Get Report) are down 24% and 23%, respectively.

The performance for large-cap biotech stocks ($10 billion market cap or higher): Amgen (AMGN - Get Report) -6%, Celgene (CELG - Get Report) -17%, Gilead Sciences (GILD - Get Report) -18%, Biogen (BIIB - Get Report) -22%, Biomarin (BMRN - Get Report) -25%, Incyte (INCY - Get Report) -27%, Vertex (VRTX - Get Report) -32%, Regeneron (REGN - Get Report) -36% and Alexion (ALXN - Get Report) -40%.

The best-performing biotech stock (all market caps): Celator (CPXX) +1616%. [Jazz Pharma (JAZZ - Get Report) is buying Celator for $1.5 billion.]

The worst-performing biotech stock (all market caps): Rock Creek Pharmaceuticals (RCPI) -98%.

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.