A few interesting facts …..

• Einstein refused surgery, saying: “I want to go when I want. It is tasteless to prolong life artificially. I have done my share, it is time to go. I will do it elegantly.” – he then died the next day
• The origins of driving on the left side go back to Medieval England where Knights would ride their horses on the left side of the road so if they encountered an enemy their sword hand would be on the correct side – nearly all countries that drive on the left now were once English colonies
• That vampire bats will die if they can’t find blood for two nights in a row. Luckily, generous well-fed bats will often regurgitate blood to share with others, in exchange for grooming. This has been noted by many naturalists as an example of reciprocal altruism in nature.

Well, it is a lot easier said than done. Recently Bill Ackman acknowledged that he should have lightened up on his long exposure at the top.

• Bill Ackman is very sorry he didn’t sell at the top

The first place to look for an explanation is mistakes we made in 2015, and we did make some important mistakes. Principally, we missed the opportunity to trim or sell outright certain positions that approached our estimate of intrinsic value. Our biggest valuation error was assigning too much value to the so-called “platform value” in certain of our holdings.

Let’s consider the overall market for a second in reference to what Mr. Ackman is talking about.

There are two forces at play here. Greed and fear. Well, they are technically one and the same. Sell too early and you will be labeled a fool.  Consider the fact that the majority of analysts and market pundits were calling for an all out “Blow Off Top” as recently as end of December. Never mind last May or July highs.

To sell at the top or buy at the bottom a better tool set is needed. That tool set is TIMING. If the cyclical long-term timing framework is known, it is a lot easier to make that decision. For instance, I outlined a number of these cycles in my weekly update Shocking: The Real Reason Behind January Sell-Off & What Happens Next

When you know that an important top or bottom is about to arrive, you no longer have to second guess yourself. Simply sell and/or go short, while the rest of the investment world awaits a blow off top that is unlikely to arrive. If you would be interested in that kind of an analysis, please Click Here 

Here is how TIMING works: Markets being, at minimum, a three-dimensional phenomena, exactly like a large molecule rotating in space, in and out of Z plane, with DNA coding sequences governing the entire process. Without understanding the market is 3-D, twisting like a plant governed by the phyllotactic laws of dual number series and harmonic composition and decomposition, all measurements taken on a 2-D chart become misleading. – Dr. B

On February 17th, 2015, when the Biotech Index (IBB) was selling at around $320 I asked the following question. Is It Time To Short Biotech (IBB)?

I was too early. Then, on March 20th, when IBB had a massive spike higher, a spike that immediately failed, I asked the following. ….Did Biotech (IBB) Top Out TODAY?

Closer, but still not good enough. Biotech (IBB) ended up topping on on July 20th and just 25 points higher. Since then, the index is down 35%. And that’s quite a bear market for the industry.

Back in March 20th I have compared IBB to Nasdaq’s blow off top in March of 2000. Here is what I said at that time.

The Nasdaq hit an Intraday high of 5,132 on March 10th, 2000, then promptly turned around and proceeded to collapse 80%. Is it possible that the Biotech Index (IBB) did the same thing exactly 15 years later?

Not only is it possible, it is highly probable. Back in 2000 it was Pets.com and Nortel Networks. Today, it is hundreds of impressive sounding “Genome” Biotech names that have

• A few Ph.D’s on their payroll.
• An impressive idea.
• A white paper on how their new generation drug will change the world and make Trillions….a  paper that maybe 10 people on this Earth can fully understand.
• No way in hell of making a cent or getting their drug to the market.
• A whole bunch of stupid investors that believe they will get rich.

Make no mistake, Biotech is an a giant bubble that will pop. And it’s not only Biotech. We are witnessing the same thing in the Silicon Valley’s “Mark Cuban” illiquidity bubble and even on the Nasdaq. Alibaba deal values Snapchat at $15 billion Do I really need to say anything when an app with no revenue is valued at $15 Billion by a company that is in its own spectacular overvaluation bubble? I hope note.

I am actually quite dumbfounded by the excessive weakness in biotech when compared to everything else. It was certainly the most overvalued and speculative sector in 2015 and it MIGHT just be forerunning the rest of the indices.

But I am not as bearish on the sector as I once was. If you did initiate a short position at or near a top, I would maintain it. The sector will push lower before its all over. However, don’t be surprised to see some big rallies and quite a bit of volatility moving forward.