Twenty-six biotechs have gone public in the U.S. this year. Other IPOs got pulled or delayed. Biotech kept going.
Of course it did.
Biotech is the only industry that sells you a product that doesn't exist, for a disease you don't have, based on a trial with 41 participants. And retail traders line up like it's a Costco sample table.
Here is the pitch. A company has a molecule. The molecule has a name that sounds like a Scrabble hand gone wrong. The molecule is "promising." Promising is a word that means nothing, spoken by a man in a fleece vest who has never once been right about the FDA.
Analysts say investors should tread warily. Fine. Treading warily is what you do on a frozen pond. It is not what you do with your rent money and a brokerage app that sends you confetti.
Consider the math. Twenty-six companies debuted. Phase 2 trials fail all the time. Phase 3 trials fail more than you'd like. Approval takes years. You, meanwhile, will check the stock price eleven times before lunch.
I looked at the chart for the sector. It is a line. It goes up, then it goes down, then it goes up again just long enough to ruin your marriage. I have drawn a trendline. The trendline says nothing, loudly.
The sluggish IPO market is the market telling you something. Biotech is the market's way of telling you something else, and that something else is "please give us money, we are very smart and also on fire."
Buy the whole group if you must. Spread the risk across twenty-six companies. That way you can lose money in twenty-six different languages.
Your retirement is now a clinical trial, and you are the placebo.
Photo by Adam ลmigielski on Unsplash
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