The Red-Hot Biotech Stocks Got Slammed -- Here's Why No One Cares

The blood-letting in the biotech sector continued today.

The iShares Biotechnology Index (IBB) fell 2.8%. It’s now down a whopping 16% since its Feb. 25 high.

Here’s how some of the individual names did today:

  • Biogen Idec fell 5.3%.
  • Vertex Pharma fell 4.4%.
  • Gilead Sciences fell 3.9%.
  • Regeneron fell 3.8%.
  • Celgene fell 1.9%.

These five stocks were among the ten worst performers in the S&P 500 today.

And yet, the S&P 500 closed up for the day, which tells us something.

According to Howard Silverblatt of S&P Dow Jones Indices, the market cap of the S&P 500 Biotechnology industry was $US404,312,608,997.80 at Thursday’s market close.

That may seem like a lot. But it’s only 2.4% of the $US16,494,076,158,127.40 market cap of the S&P 500.

In other words, you could wipe out the entire biotech sector and — all things being equal — you’d only lose 2.4% of the S&P 500.

Even at the height of 1999/2000 biotech bubble, the S&P 500 Biotechs accounted for just 0.4% of the S&P 500.

“Bubbles pervade society,” said Rich Bernstein to Business Insider in February. “They are bigger than the financial markets. I don’t think the biotech speculation is that broad, so no bubble in my opinion.”

We can debate about whether or not biotech stocks are in a bubble. But at the end of the day, those stocks only really concern biotech investors and prospective biotech investors.

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