If you are Not Trading or RE-Balancing You are Losing
- The major drivers of the current market are AI and the War with Iran, so focus on industrial. technology, and energy stocks.
- Biotechnology is in a bull market so whether you are trader or an investor, you need to be invested.
- In strong sectors like biotech you can beat the market with a few ETFs or Funds or trading SMID caps.
You probably have heard investment cliches like : “just pick ten core stocks” for your portfolio and don’t trade them.” Or, stick with a “60-40 balanced portfolio of stocks and bonds”. Or, ” I just buy high dividend stocks” and get the highest yield. If you are managing your own portfolio or even using “models” from your money managers you still should be aware of how headlines and events are affecting your stocks, especially in these times of global uncertainty. A good example is how the WAR affected energy stocks with the XLE down 3.7% over 5 days but up 23% YTD.
Well in this volatile market when events and comments from Government Officials drive volatility you may have to make trades to rebalance your portfolio.
Here is the market performance over the past week when the S&P 500 (SPY) was up 4.5%, up 4.14% YTD, and sectors as tracked by the State Street ETFs although other ETF families may work just as well. Recently we have focused on Healthcare stocks and various subsectors like Biopharma and MedTech This was a pretty wild week that took many averages to new highs: Technology was back with all the AI news and the XLK up 8.22%, up 7.21% YTD, Consumer discretionary was strong up 6.66%, and Communication Services up 4.52% 5 days, up 1.11% YTD. % for the week down 3.88%YTD. So, over te past year if you did not overweight technology and semiconductor stocks you underperformed the market and the S&P 500.
The XLV was re-balanced after the fall of UNH to hold about 35% in large cap biopharma like: JNJ, LLY, ABBV MRK etc.
Biotech stocks (IBB) ran up 4.3% last week and up 4.67% YTD at $176, but the more volatile equal weight XBI was up 7.3% and 3.7% YTD at $138.67. Funds we own were up but not as much as ETF, FBIOX up 2.65% MTD and 3.2% YTD, the PPH was up 0.67% over 5 days and 1.32% YTD at $104.53. So SMID biotechs are doing better helped by the IWM up 5.54% last week and 12% YTD at $275.78.
Other healthcare sectors were less volatile and still lagging but we added a little Abbott (ABT) and Intuitive Surgical (ISRG) keeping in mind that the MedTech sector is lagging with the IHI down12.87% YTD.
Over the past week we added 2 stocks last week to our SMID biotech trading list: Absci Corp (ABSI) at $3, and GE Healthcare (GEHC) at $74,
Biotech stocks should continue to outperform the S&P 500 supported by M&A and a general strength in small and mid-cap stocks (SMID). Eli Lilly (LLY) acquired Kelonia Therapeutics for $2B for genetic medicine capability and CAR-T pipeline and a Phase 1 drug for multiple myeloma.
Leading biotech Funds and ETFs over one year: FBIOX up 52% at $25.94, IBB up 49% over one year, XBI up 82% over past year.