Interesting gains happening in the Biotech world. Biotechnology is where all of the revolutionary drugs are being developed. It is the next frontier for medicine. Most investors had no idea this was happening because of the psychology of the market. Most people would assume that because the housing market is at relative lows, that they should run from it like a wildfire. But the smart money is now getting into a market that has been hammered and now turning their dollars into income coming from their rentals. The smart money has been placing their money in the pharma companies and are seeing some nice returns.
Really Interesting Sector Hitting New Highs
Not many people know this, but the NASDAQ Biotechnology Index is hitting a 12-year high. And many biotech stocks are making all-time record highs! Of course, logically this makes sense being that the baby boomers are entering their retirement age and the government has been redirecting the taxes they take from their citizens and forcing their people to engage in commerce through new acts being pushed through the system. Upon reaching retirement age, a woman named Kathleen Casey-Kirschling filed to receive her Social Security retirement benefits. What’s so important about that? Kathleen was born on January 1, 1946. She’s officially the first baby boomer to file for Social Security benefits. Behind Kathleen is a line of 80 million more like her, ready to collect their share of the government-promised pie. As the baby boomer generation rushes into old age like a colony of army ants, health care spending is expected to skyrocket. And all this spending represents a boom for drug and medical device developers and manufacturers.
Take a look at an YTD chart of the NASDAQ Biotechnology Index versus the S&P 500:
Catalysts For The Overall Market
1) U.S. Economic Data: Recent data has been soft. More affirmation of that softening will lead to a pullback.
2) Europe: Right now, no news is good news for the stock markets. So most of the catalyst here is to the downside if things start unraveling once again.
3) China: There is no question that their economy is slowing. The assumption by most investors is that any further decline will be met with massive stimulus. That would likely be well received by the markets and push up stocks.
It is likely that we will continue to experience ongoing volatility merely based on the swings that we’ve seen in the past few months. Metals are acting just like they did in 2008 where economic data would come out poorly and put downward pressure on the metals.