Sometimes, the greatest opportunities are hiding in plain sight.
Yet, they’re ignored, or “left for dead” out of fear that a sector may be too speculative. Biotech and pharmaceutical stocks are the perfect examples. But only the foolish have ignored the rewards the sector has produced… and will produce.
In 2008, I first began telling folks to back up the truck on biotech.
At the time, I told many to buy the iShares NASDAQ Biotech ETF (IBB) at just $80 a share on one key catalyst – 80 million Baby Boomers were just beginning to retire beginning in 2008. For the next 20 years, 10,000 Boomers would retire by the day, seeking better care, new innovation and ways to live longer.
Who could ignore that?
By 2015, the IBB ran as high as $400 a share.
Granted, it pulled back on political threats, fears of overvaluation from our own Federal Reserve, and the idea the bubble had been pricked. But as a long-time trader in the sector, I can tell you with a good amount of certainty that even at $333 in August 2017, there was still opportunity to be had.
Even some of the best-known biotech and pharmaceutical names were on sale in August. Amgen (AMGN) pulled back to $167 before rocketing to $177 days later. Celgene (CELG) fell to $127 before moving to $139 in days, too.
Lesser-known stocks, like Immunomedics (IMMU) were up 16% in days. Dynavax Technologies (DVAX) was up more than 90%.
There was so much interest that analysts began to call for the IBB to move well above $400 again within months.
Not only are Baby Boomers still retiring, but also the innovation, the demand, and the mergers and acquisitions, like the $12 billion cash deal between Gilead Sciences (GILD) and Kite Pharma Inc. (KITE) were causing quite a stir.
Sector innovation is just as intense.
In fact, in late 2017, the FDA approved the first CAR-T cell therapy that can genetically alter a person’s own cells to fight against cancer – a milestone that ‘s expected to change treatment options as we know it. This latest one is approved for children and young adults for an aggressive type of leukemia, B-cell acute lymphoblastic leukemia.
In short, it’s not smart to bet against biotech or pharmaceutical names.