Is This The Chart That Scared Yellen Capital Out Of Biotechs?

Nope - no bubble here at all...

"wrong" or "early" or "other"... Biotechs driven by fun-durr-mentals like everything else.

As Bloomberg reports, perhaps there is a limit it this insanity...

Demand for options tied to declines in an exchange-traded fund tracking the companies rose to the highest level in three years relative to bullish ones, according to data compiled by Bloomberg. The Nasdaq Biotechnology Index has risen 549 percent since March 2009, including a 3.8 percent advance last week.

Interest in bearish options on drug developers has jumped in the last year after the group was called out as overvalued by Federal Reserve Chair Janet Yellen on two occasions. Biotechs are selling stock at a pace not seen in a decade and one concern is that something will disrupt the money spigot.

“The sector is dependent on capital that might shy away at the first sign of weakness,” Goldman Sachs derivatives strategists Katherine Fogertey and John Marshall wrote in a June 17 client note. “Recent pipeline setbacks have increased concern of this going forward.”

Biotech companies are doing follow-on stock offerings at the fastest pace in more than 10 years. In the first quarter, biotech and pharmaceutical companies used 93 share sales to reap $18.7 billion, three times more than in 2014, according to data compiled by Bloomberg.

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Be careful...

“Biotech stocks have had a speculative fervor to them for some time now,” Todd Lowenstein, who helps manage $16 billion at HighMark Capital Management Inc. in Los Angeles, said by phone. “Of any part of the market, this is the one with the most bubble-like characteristics, without question.”

Or Buy buy buy...

“The customer base for biotech won’t stop buying,” Warren, who manages more than $100 million at Exton, Pennsylvania-based Warren, said by phone. “This sector is probably the best-placed to get any kind of growth, and it’s not going to go away quickly.”

Comments

[Urban Roman]

Biotechs, biyotchez!

[Cognitive Dissonance]

Ya ain't gonna find a bubble if ya ain't looking for a bubble.

<Mission accomplished.>

[Bunga Bunga]

Fed statute rule #1: Did it burst? YES: it was a bubble. NO: it is not a bubble. NOT SURE: it is not a bubble

[madbraz]

Stop reverse repos and you take care of this bubble.

[bidaskspread]

I'd keep playing.I don't think the heavy stuff will come down for a while.

Bishop: You're right, anyway the good Lord would never disrupt the best game of my life.

[Manipuflation]

+1 for that quote.  I work at a "crummy snobatorium" in somewhat of the role as Carl does.  Every day, I have Caddyshack lines running through my mind.  Great movie.  Al Cervik is my favorite character.  Rodney Dangerfield was a legend.

Johnny Carson with Rodney Dangerfield.  Some pretty classic lines.

[cigarEngineer]

Price/Sales is not a good ratio to value companies whose value depends largely on intellectual property that is amortized. A better way to value biotechs is EBITA/EnterpriseValue, as that ratio focuses on the drivers of operating performance — return on invested capital, growth, and free cash flow.

[kelley805]

Here are some more signs of a coming recession.

http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/

http://michaelekelley.com/2015/02/24/would-you-pay-39-more-than-asked/

Here is the starting point.

http://michaelekelley.com/2015/04/28/next-recession-will-start-with-this-country/

Here is how to prepare.

http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/

Here is how to get your mind off this stuff.

http://michaelekelley.com/category/humor/

Good luck!

[BI2]

https://biblicisminstitute.wordpress.com/2015/06/25/warmongering-vs-econ...