Over the past six months, we've seen the Nasdaq Biotechnology Index, an indicator for the entire sector, take some wild swings up and down, often by as much as 10% from week to week.
That's in stark contrast to the previous half-year, when we experienced a relatively steady upward swell.
This year's unsettling international headlines haven't helped. In just the last few months, we've battled doom-and-gloom sentiment on the debt crisis in Greece, currency manipulation in China, cratering oil prices, the burgeoning debt crisis in Puerto Rico, and the specter of a September rate hike from the Fed.
The most important factor driving this volatility is more complicated than "bad news," though. We'll get to that in a moment.
There is good news: This turbulence isn't insurmountable. And the simple tactics I'm about to share with you could dramatically improve your profits in this choppy market.
How We'll Adapt to a Rapidly Changing Sector
A flood of new investors, chasing after the huge potential profits in biotech but armed with very little understanding of pharmaceuticals or medtech, has proven hyper-reactive to the slightest agitations in the market, driving prices this way and that.
Media chatter about bubbles and overvaluation - both nonsense - have made a lot of these investors even more skittish. And a few unscrupulous professional market manipulators have made the situation more extreme by bidding stocks up or down even further, depending on momentum.
In fact, in my Biotech Insider Alert investment service, we're going to use them to our advantage and make our positions even stronger by taking two simple steps to help protect us from market volatility generally and biotech sector volatility in particular:
About the Author
Ernie Tremblay has more than 25 years of experience in following and analyzing the latest developments in health, medicine, and related technologies. He understands the FDA approval process, as well as the "hard science" behind new, experimental drugs and the market demand for them - and has a comprehensive grasp of the complex dynamics that determine whether a new drug will be a breakthrough winner, or just another casualty of the FDA approval process.