Why No One Knows How to Trade Biotech

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Oct. 2 (Bloomberg) -- On today's "Chart Attack," JMP Securities' Mark Lehmann and Bloomberg's Adam Johnson look at investing in biotech stocks. They speak on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Time for chart attack, where we show you a chart that will make you smarter and we will try to make you a little bit of money with this one today.

The greatest story never told, but we are telling it.

Biotech, you have been making a lot of money in this sector.

Wax a sector for two years that has outperformed the overall market.

There is also a tremendous amount of m&a and the sector.

I tell you what, matt, we will slide the camera in.

Looking at the returns, the biotech index in red, as you can see this thing really over the past year has been on fire, outperforming the nasdaq in yellow.

What -- what -- what drives biotech markets?

One thing that drives biotech is optimism.

If you see what is working, you have performance.

The second thing driving it is m&a activity.

There has been a tremendous amount year.

If you have to plow those assets back, it is hard to do, there are not that many big ones.

They put money into smaller companies.

You can see that performance as well.

A curious, i have to give you a bit of a hard time, underperforming nasdaq, why would i buy yours when i could go by there's? a good question, it is a bit of a false chart.

It is a small cap index, so the minute it goes $750 million we throw it away.

We try to be true to our strengths.

The chart, albeit not as great as what we see for the other, it has outperformed for the last couple of years.

For the benefit of the viewers, give us some advice on those stats.

The average life science ipo is up 60%. i would guess that some of your viewers are saying -- white -- my goodness.

Why did you not tell me about that then?

I think you are also missing underneath the covers the kind of performance where the fda has the nora, native and it does have an underpinning of real reasons why people are putting their investment dollars to work.

Certainly you can make a lot of money, thank you for being

This text has been automatically generated. It may not be 100% accurate.


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