Biotech can be a godsend for investors in a “stock picker’s market”…
Remember, today’s market is a lot different than the market of the past 40 years. As my colleague and Chaikin Analytics founder Marc Chaikin explained at the end of last month…
Stocks will [now] move up or down mainly based on company merit. If we misjudge anything, we can’t count on the Federal Reserve’s generosity to hand us good equity returns anyway.
In short, we’re living in a stock picker’s market.
I know what you might be thinking… At first, an industry focused so heavily on “growth” expectations like biotech doesn’t seem like a smart approach in a volatile market.
But keep in mind…
This space is full of revolutionary breakthroughs. And as such, these companies’ stocks will move up or down based on their own merit. The Fed won’t have anything to do with it.
So in that way… it’s exactly what we want.
I’ll explain today how we can use the Power Gauge to dive deeper into the biotech space. And as you’ll see, it’s an area worth exploring as we face this new stock picker’s market…
Our future depends on biotech. And these companies work on all sorts of progress…
Some biologics makers help fight previously untreatable conditions. Meanwhile, others focus on “human augmentation” – developing drugs that combat the effects of aging.
Personalized medicine is a huge game-changer, too…
Traditionally, drugmakers developed medications for broad populations. But now, thanks to technological advancements, they can focus their drugs on an individual’s genetic makeup.
Right now, in this chaotic stock market, the Power Gauge tells us to look at biotech…
The Power Gauge currently rates 317 stocks in the industry as “bullish” or better. At the same time, 242 stocks rank “neutral” and only 37 have unfavorable grades today.
That’s a lot of “bullish” from which to choose.
With all the volatility in the market right now, it’s great to diversify your risk. So instead of focusing on specific companies, let’s consider biotech exchange-traded funds (“ETFs”)…
The biggest ETF in this industry is the iShares Biotechnology Fund (IBB). It has about $10 billion in assets under management (“AUM”). And today, its Power Gauge ranking is “very bullish.”
Two tiny, niche ETFs also intrigued me as I looked closer at the biotech space. Both of them also rank “very bullish” right now…
The Virtus LifeSci Biotech Products Fund (BBP) has an AUM of only around $17 million. And the Virtus LifeSci Biotech Clinical Trials Fund (BBC) has an AUM of roughly $24 million.
On August 30, I explained that investors shouldn’t fear extremely small ETFs…
These ETFs aren’t like “penny stocks.” They’re tradable. And they tend to pursue interesting, non-generic strategies…
For example, BBP invests only in commercial “product stage” companies whose lead drug has already received U.S. Food and Drug Administration approval. And as its name implies, BBC invests specifically in companies whose lead drug is still undergoing trials.
The overall market has been awful this year. And it’s on yet another downswing right now.
But in a stock picker’s market, you can always find opportunities if you know where to look. The key is to focus on companies that don’t need the Fed’s help to succeed.
And as we learned today, the biotech space fits that bill.
Good investing,
Marc Gerstein
Editor’s note: If you’re looking for a guide during these turbulent times, you’re in luck…
This Thursday night at 8 p.m. Eastern time, Marc Chaikin will join forces with one of the most brilliant investment minds he has ever met to host the 2022 Financial Lifeline Event.
During the event, attendees will learn about a “financial lifeline” that could essentially erase the past eight months of heartache, losses, and fear. But it’s critical to listen carefully to this message… You could suffer even bigger losses if you’re on the wrong side of the trade.
The event is FREE for all Chaikin PowerFeed readers. Save your spot in advance right here.
