Aug 1, 2011

Posted by in Biotech Stocks | 0 Comments

Succeed with BioTech ETF’s

A Lesson on how to succeed with Biotech ETF’s in turbulent markets.

This has been the Big Picture on many investors and traders minds more and more in 2011, rightfully so when looking at successful performances than can not nor should not be ignored.

This Hot Sector has been gaining more interest now than ever before for various reasons, they are not only moving the markets during up trends but are also being looked at as safe havens during the market hiccups alike.

Many folks that I have been speaking to have been raising extra cash to position themselves accordingly within the high energy risk/reward sector during this recent correction on the heels of the debt issues on the horizon.

We all here on the Runway condone this action as it’s why we invest, to reap the rewards on hand.

biotech etf
The Magic Potion stands ahead…The Fountain of Youth!

There’s no evidence any such fountain ever existed, but people still seek it today.

Baby Boomers are particularly resistant to riding quietly into the sunset.

Many of us want to hold on to youth as long as we can.

When consumers want something bad enough, capitalism usually obliges. The biotechnology industry’s explosive growth in the last two decades was no accident … and I think it’s only just beginning.

As more and more exposure start to help the Biotech ETF cause, it is modern genetics are the key to unlocking the real fountain of youth.

The resulting biotechnology hasn’t made us any younger … but it helps us not feel so old!

The demographic trend is this sector’s friend. By 2020, the world will have more than 1 billion people age 60 and older. Those in the developed world (a group that by 2020 will include China) control vast wealth.

How will they spend it? By searching for that same elusive fountain.

Baby Boomers are pouring their capital into the best medical treatments money can buy. They aren’t just after longer life; they want better life.

They want cures for whatever stands in the way of an active retirement. Cancer, heart disease, obesity, arthritis, wrinkles, you name it: Scientists are working on expensive treatments for well-heeled patients.

Is eternal youth really a reasonable expectation? No, of course not.  Nevertheless, this generation grew up watching men travel to the moon. They received polio vaccines and saw smallpox wiped off the map.

If they think any challenge can be overcome with enough cash and effort … well, it’s hard to blame them.

Is the Biotech ETF space the Hedge Masters hideout?

Easy enough many of you are thinking, fairly simple to comprehend, but we live in tough times. Can health care in general, and particularly biotechnology, keep flying into the wind?

Yes, it can, and here’s why:

Some very wealthy people will gladly spend almost any amount of money to extend their lives. Once they do, the knowledge gained in the endeavor doesn’t just disappear. It spreads quickly. Then the price starts to drop. The new treatments become available everywhere.

The rich guy who financed the initial research? He got what he wanted. If his investment lets other people live longer, too, then he did a good thing.

All this remains true whether the economy is in boom, bust, recession or depression. Will biotech have ups and downs? Of course. But as long as people want more years and better lives, this sector will have a bright future.

ETFs: Tailor-Made for Biotech Risk/Reward Players

You can, of course, jump into any number of biotech stocks that are pursuing some kind of breakthrough. Unfortunately, many will fail. The key is to have a diversified portfolio so the winners offset the losers.

And how do you accomplish this? Biotech ETFs, of course!

With a sector ETF, you can have instant access to an entire index of biotech stocks. I think this approach is far better than trying to pick stocks.

Listed below are a few Biotech related ETFs you may want to research:

iShares Nasdaq Biotechnology (NASDAQ:IBB)
SPDR S&P Biotech (NYSE:XBI)

First Trust NYSE Arca Biotechnology (NYSE:FBT)
PowerShares Dynamic Biotech and Genome (NYSE:PBE)
ProShares Ultra Nasdaq Biotechnology (NASDAQ:BIB)

Keep inmmind that IBB has 2X daily leverage hence it has been known to respond more volatile that the others above. Please make note.
For those times when biotech is retreating, you can also get 2X inverse leverage in ProShares UltraShort Nasdaq Biotechnology (NYSE:BIS) – http://finance.yahoo.com/q?s=bis&ql=1

That means you stand to make 2 percent for each 1 percent drop in the Nasdaq Biotechnology Index.  So this Biotech ETF can be used as either a speculative inverse trade, or to temporarily hedge your longer-term biotech positions.

biotechnology etf-s

And for clear, concise alerts on when to get into an ETF — and when to get out — you may be interested in getting familiar with Japanese candlesticks hence they have been textbook and spot-on when it comes to Exchange Traded Funds as of late.

Every investor has a different agenda when trading in the markets, using different instruments to learn from as well as profit from. With that being said, The Biotech ETF space isn’t right for everyone, of course.

But if you have a long-term perspective and are willing to ride out the dips, the upside potential is huge while the sky is the limit!

The Captain signing off for now….Trade Smart, Trade Well & Most important Stay on board the Stock Runway!

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