Is It Time to Buy the Dip With Biotech Stocks?
As investors scramble to insulate their portfolios from the chaotic global economy, inflation, and a falling market, biotech stocks might seem a safe harbor. After all, these companies don't need to procure much in the way of raw materials to operate, and the medicines they develop are priced to get a healthy margin and recoup the costs of development, both of which make inflation and other macroeconomic issues less concerning.
But with the SPDR S&P Biotech ETF (NYSEMKT: XBI) down by more than 28% year to date -- even worse than the broader market's losses of nearly 19% -- the current, widespread pessimism toward biotech stocks is undeniable. And it could be a whale of a buying opportunity for enterprising investors looking for a bargain with the potential for lots of long-term appreciation.
Let's examine why biotechs are underperforming and determine whether there's a path to recovery.
Source Fool.com
