Market Caution - US Biotech Stocks Look OverHeated

  

ARE BIOTECH STOCKS IN A BUBBLE?

   

ARE BIOTECH STOCKS IN A BUBBLE?

 This is a question that is being asked. According to an article by Bloomberg (Biotech Index in Nosebleed Territory - Up 500% In 4-years, Trades At 10X Revenues – Bloomberg Business, March 8, 2015) the 269 Biotech companies that are listed on the NASDAQ are up more than 500% in the past four years. The Biotech companies have the biggest weighting on the NASDAQ at 11.2%.

A 500% gain is impressive. The NASDAQ Biotechnology Index (NBI) is up a more modest 338%. The TSX Health Care Index (THC) is up an even more modest 187% in the same period.  It appears that some of the really high flyers are not even in the NBI. As to the THC, it has been led primarily by one stock – Valeant Pharmaceutical (VRX-TSX). VRX is up 665% in the same period. Read More.

Be Extra  Cautious As Rumors Began Last Year 

CHINA 2015 CRISIS: State -Run Bond Defaults On Interest

Not Concerned About China’s Financial Crisis? You Should Be

In February, IVN reported on a mostly ignoredstudy claiming that the world, especially China, was at risk of default (and possible economic meltdown) because of skyrocketing debt burdens.

On Tuesday, almost all media outlets worldwide picked up on the first Chinese-state owned business allowed to default.

Struggling in a cooling economy, Baoding Tianwei Baobian Electric missed its $13.8 million interest payment due on April 21 for bonds traded within China. Even though it is a state-owned company, Beijing let them default. Read More

What if rates begin to climb too? Oh my...