Sometimes it pays to take a step back from looking at the trees to see the forest. Indeed, most people will know of the explosion in Social Media & also the dizzy rise in the stocks of the lucky listed firms in this sector. But few will be aware that Biotechnology sector stocks have even surpassed the explosive rally in both Social Media & Internet related stocks since beginning of 2012.
The above chart clearly illustrates what happened in the last two & a half years using IBB (Biotech ETF), FDN (Internet ETF) & SOCL (Social Media ETF). Now, all 3 sector ETFs have suffered corrective move lower from March 2014 all time highs of around -16% for IBB, -19% for FDN & -28% for SOCL. S&P500 (SPX) & Nasdaq100 (NDX) only suffered a -1.5% & -5% drop from March 2014 highs respectively.
Some commentators & analysts out there think that there are nuggets to be found in the Biotech carnage http://www.forbes.com/sites/kenkam/2014/04/18/opportunities-among-the-rubble-of-the-biotech-selloff/ . However, Asianmacro think that unless you are very familiar with the precise potential new ‘wonder drug’ or ‘cure all treatment’ that is in the pipeline of some of these Biotech companies; more often than not, it is like prospectors trying to make it big in drilling for oil or finding the next new gold vein in the ground. Who dares win!
However, Social Media might be more interesting now given the deeper correction & some of the names in the ETF & sector like Tencent, LinkedIn, Sina Corp/China & Google continue to deliver in their businesses & earnings. In fact, Asianmacro recommended a buy recently in Tencent on 6 May 2014 https://asianmacro.com/2014/05/06/where-to-on-social-media-facebook-10-cents-or-rakuten/ .
OK time to hit the ‘LIKE’ button or perhaps the ‘BUY’ button as well !