|
Biotechs
Dec 3, 2021 17:31:25 GMT
via mobile
Post by chang on Dec 3, 2021 17:31:25 GMT
Take a look at the chart of XBI - ugly. Down 37% from its high.
I bought this at $59 and added at $77 and $100, so I’m OK, but the question now is: buy more (which I won’t), hold, or sell?
|
|
|
Post by uncleharley on Dec 3, 2021 22:47:10 GMT
|
|
|
Post by chang on Dec 3, 2021 23:15:41 GMT
Thanks uncleharley . I really don't get it, the planet has been on the brink of extinction from a pandemic, and instead of soaring 1000% biotechs have just crumbled. What the...? I don't own a lot, but not a little either. I have a nice CG (which I was hoping not to have to realize and pay tax on), but I don't want to see it all evaporate either. As is always the case, I suspect that once I get around to noticing something it's too late to act on it. If anybody can sell at the bottom, it's me. Hence, my reticence to sell now. It's a volatile class of stocks, I know, but at a certain point they will rocket upward again.
|
|
|
Post by uncleharley on Dec 3, 2021 23:36:53 GMT
Sorry about the bad link This is the one I meant to post. stockcharts.com/h-sc/ui?s=XBI&p=W&b=3&g=0&id=p76405029039&a=1074819727&listNum=86 The chart is an intermediate term, weekly chart that has no bullish indications whatsoever. The price is currently in a high volume decline with no indication of support. Support could develop at the levels mentioned in my previous post, but there are no guarantees of that. Regardless of where it bottoms, it is unlikely that the ETF will turn on a dime. Normally a bottom is formed and an advance is developed from there. The contents of the ETF's portfolio might give some clues of the fundamental reasons for the current decline, however the technicals are quite clear.
|
|
|
Post by uncleharley on Dec 4, 2021 19:31:30 GMT
The Bio-techs are probably correcting because of further regulation on the pricing of prescription drugs.
|
|
|
Biotechs
Dec 5, 2021 0:23:51 GMT
via mobile
Post by chang on Dec 5, 2021 0:23:51 GMT
From the start, I expected biotechs to be madly volatile, and my strategy was to sock away a limited amount to hold forever.
So, it will take something approaching seismic to get me to abandon that strategy and sell. I don’t think it’s gotten catastrophic yet. Of course, once it does, it’s almost certainly too late … which is what prompted my post. As usual, I’m undecided and doing nothing for the moment. Maybe because I’m not sure whether to buy or sell.
|
|
|
Post by steadyeddy on Dec 5, 2021 0:38:33 GMT
From the start, I expected biotechs to be madly volatile, and my strategy was to sock away a limited amount to hold forever. So, it will take something approaching seismic to get me to a a din that strategy and sell. I don’t think it’s gotten catastrophic yet. Of course, once it does, it’s almost certainly too late … which is what prompted my post. As usual, I’m undecided and doing nothing for the moment. Maybe because I’m not sure whether to buy or sell. There was a comment on biotechs/pharma in the latest Barron's (see YBB post) that seemed optimistic.
|
|
|
Post by rhythmmethod on Dec 5, 2021 2:02:01 GMT
From the start, I expected biotechs to be madly volatile, and my strategy was to sock away a limited amount to hold forever. So, it will take something approaching seismic to get me to abandon that strategy and sell. I don’t think it’s gotten catastrophic yet. Of course, once it does, it’s almost certainly too late … which is what prompted my post. As usual, I’m undecided and doing nothing for the moment. Maybe because I’m not sure whether to buy or sell. If current events are making you rethink a long term strategy, best to stay put until you decide your initial strategy was deficient. You're smart to stay put, IMO. Me, I'm long bitcoin and BABA 😂🪘
|
|
|
Post by chang on Dec 5, 2021 3:14:48 GMT
If I owned none, I would probably buy. That tells me I should probably hold.
|
|
|
Post by retiredat48 on Dec 5, 2021 5:02:04 GMT
FWIW...I consider biotechs have an investing flaw that makes them a better trading vehicle...of perhaps every 2-5 years duration.
The flaw is this. I just looked up the yield on XBI and M* has it at 0.19%. I repeat, 0.19%. What good is an investment if it never pays a dividend? You can only count on total return, which means when the fund price gets high, exit.
I have owned biotech in the past, had huge gains, and gave it all back in price declines during bear markets. No dividend means no "floor."
The flaw on why no yield, IMO, comes from the following: People who start biotech companies are very altruistic. They consider they have a higher purpose than making money for shareholders. That higher purpose is to cure more things.
Thus, if a biotech has earnings, they plow them back into research on curing the next disease etc. They would all like to cure cancer, for instance. So why pay out dividends? Better to invest in more research...and more research. Of course much of this money/research goes nowhere. Retained earnings means the companies will go up in price over time, but don't expect dividends.
The Japanese treat Japan company shareholders similarly...why pay dividends to Americans. It is why Japan is considered "unfriendly" to shareholders. A banner year in earnings often goes to local charities and Japan country causes, rather than dividends...and nothing shareholders can do about this.
When the world has cured all diseases, then perhaps biotechs will pay dividends...or perhaps they then begin spending on climate change initiatives!
R48
|
|
|
Post by FD1000 on Dec 5, 2021 5:03:25 GMT
I looked and XBI top 10 and I don't recognize one name on that list, that's the problem. But I heard about Pfizer + Moderna ( link). ============= Only buy income stocks? GOOG + AMZN never had income. Looks pretty great to me compared to high paying div stocks such as SCHD around 3%( link). 10 year of growth vs value(higher div) shows growth made twice as value( link) Attachments:
|
|
|
Post by chang on Dec 5, 2021 9:06:30 GMT
FWIW...I consider biotechs have an investing flaw that makes them a better trading vehicle...of perhaps every 2-5 years duration. The flaw is this. I just looked up the yield on XBI and M* has it at 0.19%. I repeat, 0.19%. What good is an investment if it never pays a dividend? You can only count on total return, which means when the fund price gets high, exit. I am not sure that growth stocks are “flawed” per se because they don’t pay a dividend. If I had been invested 100% in Apple, Amazon and Microsoft during their infant years, I would be a mighty rich man today. I see nothing wrong with counting on total return. In fact (and this is an old argument … I’m not looking to reopen old cans of worms) my view is that the only kind of return is total return. Pretend that all dividends are paid in shares: then you sell shares whenever you need money. The amount of money you receive is a function of both the share price and number of shares, but those details don’t matter.* So, in my personal view, “income investing” is a fallacious, nonexistent concept. Total return is all there is. Anyway, what you’re saying is that biotechs are growth stocks. Yes, I know that, and they’re probably the growthiest of growth stocks, too. And yes, I am invested in them (especially the smaller ones — see how XBI is constructed) because I am looking to profit from revolutionary discoveries, as well as acquisitions. (*To carry out this gedanken experiment fully, pretend also that the fund or companies split their stock every day to maintain a constant share price. So you see, there really is only one kind of return: total return. The distinction between capital gain and dividends is really meaningless.)
|
|
|
Post by retiredat48 on Dec 5, 2021 17:53:55 GMT
NO...I'm not saying it is growth or dividends.
The growth stocks being cited are indeed growth...you increase business and invest in new facilities, capacities, etc. Stock prices rise. Eventually the earnings turned into payouts.
I am referring to biotechs spending money on research. This is not generic growth. Much such research fails. And where it succeeds, the profits are used for new research. This helps humanity; does not help shareholders.
GE (where I worked) had a huge R&D Center that in last three decades provided about zero to the company.
My community in FL had the gvt executives invest directly the peoples money into some biotech companies, to get them to build facilities in Port Saint Lucie. The biotechs came. They all failed. Leaving millions of debt in my town. And buildings not paying taxes. The town gvt vows never again do this.
So growth stocks--yes; dividend payers--yes
But be careful of companies that do not return anything to shareholders. They will find a way to eventually make bad investments--such as, perhaps, funding ventures to the planets.
And careful of those China-based companies. We see the governmental control of earnings and profits such that shareholders may see little in the long run. If I were the communist leader of the PRC, I would do exactly as their leader is now doing--pay nothing to rich Americans; stop creating billionaires (China has 600 billionaires now); fund China projects and activities; use China own capital for new IPOs...etc. Edicts such as: No profits for companies educating our people. The list goes on. It is why I had a major theme this year of exiting China.
R48
|
|
|
Post by yogibearbull on Dec 5, 2021 20:31:09 GMT
retiredat48 made a point that shouldn't be lost in total return vs income noise. Some companies never grow up (or want to grow up). They keep retaining earnings and keep hunting for new tricks. That is like keeping all eggs in one basket, keep adding new eggs to the basket and then leave basket watching to the company. Well, there is only 1 company that has gotten long-term pass on this - Amazon/AMZN. Bezos had a great ride/career at Amazon where he did whatever he wanted with the retained earnings and cash flows, somethings didn't work out, but many did and few things worked in big ways. One cannot say the same for most biotechs. As was noted, Barron's had a favorable note on lagging pharma stocks.
|
|
|
Post by chang on Dec 6, 2021 3:11:30 GMT
NO...I'm not saying it is growth or dividends. The growth stocks being cited are indeed growth...you increase business and invest in new facilities, capacities, etc. Stock prices rise. Eventually the earnings turned into payouts. I am referring to biotechs spending money on research. This is not generic growth. Much such research fails. And where it succeeds, the profits are used for new research. This helps humanity; does not help shareholders. GE (where I worked) had a huge R&D Center that in last three decades provided about zero to the company. OK retiredat48, I see the point you are making. But it is a subtle one, and not that easy to analyze, quantify, and act on. You are distinguishing between growth stocks that reinvest profits into research with clear money-making aims, to grow the company (and profits and shareholder value), as opposed to less focused reinvestment in abstract research, with tenuous links and hard-to-estimate probabilities of converting the investment into profits for shareholders. I see the distinction, but I doubt that growth companies fall clearly into one bucket or the other. I expect there is a continuous spectrum. Certainly some pharmaceuticals clearly invest in R&D with the greediest of motives, while some biotechs might be more altruistic .... but today's Robin Hood biotech is tomorrow's Scrooge pharma. I think even altruistic biotechs are hoping to hit the big-time and make pots of money. Anyway, I'm not convinced that they are "flawed" as an investment. I'm more interested in assessing whether there are environmental factors that are lining up against biotechs as a class, which would indicate that I should take my profit and exit the investment, or ought I to ignore the volatility and keep it for the long haul, per my original plan.
|
|
|
Post by retiredat48 on Dec 6, 2021 3:44:50 GMT
NO...I'm not saying it is growth or dividends. The growth stocks being cited are indeed growth...you increase business and invest in new facilities, capacities, etc. Stock prices rise. Eventually the earnings turned into payouts. I am referring to biotechs spending money on research. This is not generic growth. Much such research fails. And where it succeeds, the profits are used for new research. This helps humanity; does not help shareholders. GE (where I worked) had a huge R&D Center that in last three decades provided about zero to the company. OK retiredat48 , I see the point you are making. But it is a subtle one, and not that easy to analyze, quantify, and act on. You are distinguishing between growth stocks that reinvest profits into research with clear money-making aims, to grow the company (and profits and shareholder value), as opposed to less focused reinvestment in abstract research, with tenuous links and hard-to-estimate probabilities of converting the investment into profits for shareholders. I see the distinction, but I doubt that growth companies fall clearly into one bucket or the other. I expect there is a continuous spectrum. Certainly some pharmaceuticals clearly invest in R&D with the greediest of motives, while some biotechs might be more altruistic .... but today's Robin Hood biotech is tomorrow's Scrooge pharma. I think even altruistic biotechs are hoping to hit the big-time and make pots of money. Anyway, I'm not convinced that they are "flawed" as an investment. I'm more interested in assessing whether there are environmental factors that are lining up against biotechs as a class, which would indicate that I should take my profit and exit the investment, or ought I to ignore the volatility and keep it for the long haul, per my original plan. Fair enough, but I didn't say one shouldn't buy them; I stated they are best for long term trades, not buy and hold forever. (Your basic question was buy, hold or sell?--an investment strategy). And yes, for an individual company, perhaps difficult to analyze. But for an ETF that holds many biotech companies, then this trait dominates. Many biotechs make money; few pay any, or decent dividends. Also, I was not referring to growth companies who invest in R&D. I was referring to growth companies who, due to order demands and generic growth, have to reinvest earnings in things like buildings, equipment etc...classic growth situations. And companies who buy-back shares when no good reinvestment exists. Look at past history. In bear markets, biotechs get killed; huge price drops. It is one sector where waiting for a general stock bear market to buy, profits handsomely, if one has courage to buy after the biotech massacres. So I wait. R48
|
|