The chart of (IBB) is from March 20th. One can easily argue that Biotech is the most overpriced and highly speculative sector within the overall stock market structure today. That doesn’t bother Jim Cramer — If You’re Not in Biotech for the Long Haul, Hit the Road I’ll give him one thing, Mr. Cramer has perfect timing for identifying the worst investments out there.
Here is what I said about Biotech on March 20th, the day it arguable topped out. Did Biotech (IBB) Top Out TODAY?
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 NortelNetworks. 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.
Anyway, why do I believe we might have hit the top in Biotech (IBB) today? Today’s blow off (gap) open and some of my other work within the sector. That is to say, don’t be surprised if we get a massive sell-off in Biotech over the next few months.
