Biotech fundamentals, broadly speaking are sound, but plenty of critics point to the industry’s richer-than-average multiples, which could make the likes of IBB vulnerable to more downside. Gven the lofty year-to-year returns, some are growing cautious over the biotech sector. Some argue that the high valuations in the biotech sector have been supported by a low interest rate environment. [Don’t Mess With the Leveraged Biotech Bull]
“This is not a definitive breakdown just yet because it is still small in the context of a multi-month advance. However, when a leader stumbles we must take notice. Has everyone who thought about buying biotech already done so leaving demand weak? Or is it simply that no sector leads forever and it is just time for it to relinquish the leadership mantle to some other group?,” adds Kahn.
iShares Nasdaq Biotechnology ETF
