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by Michael Shulman
BiotechBlitz



Yes, it is time to buy – sort of. It is actually time to do some research, time to prepare, time to nibble. I write this at 10:50 AM on Thursday August 16.

As you know, I recommend biotech and life science stocks for a living, via a newsletter, the ChangeWave Biotech Investor, and this is not a plus for letter but many of my recommendations have outperformed the market in the past week and about a third are up. Why?

• Fear of a recession and a flight from some core consumer and related stocks has pushed money to other areas of growth – and biotech and life sciences is the fastest growing set of companies in the world.
• If you speculate, are you going to time the market and get into subprime mortgage lenders or bonds, or the home builder, or would you rather invest in a speculative company trying to cure cancer or treat Alzheimer’s Disease? That is a no-brainer for many who have a longer term perspective – not to mention the home building market is not going to rebound until mid 2009 at the very earliest.
• If you an ignore market tumult – a la Warren Buffet – and look at this kind of correction as a buying opportunity – a la Warren Buffet – and are willing to speculate on some science and regulatory outcomes – a la Michael Shulman, I like putting myself in good company – the bottom or near bottom of a correction is a great time to invest.

As you may have noted, I did say correction, not bear market. Bear markets require some serious economic dislocation – not there – really awful credit conditions for an extended period of time– not there, not going to happen – or really malignant government action – uh, no comment about the folks who brought us “shock and awe”, WMD in Iraq and “great job, Brownie,” but fortunately the Fed is not run by the current gang who couldn’t shoot straight in the White House and on Capitol Hill.

Yes, time to nibble. This correction might go deeper – we don’t know how many more hedge funds need to sell equities to pay off margin loans on CDOS, CLOs, and other credit facilities and bonds that are falling in price, and they are selling off their winners (just look at AAPL, not a biotech but so cheap now it is immoral).

Where to start? The little guys, especially those with cash to burn for a few years and a good chart




BiotechBlitz is a regular contributor to BioHealth Investor
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