Right now, It is all about the inflation equation. The companies making money right now are trading at bubbly valuations because no one wants to bet on growth companies that promise to make billions 10 years from now. They fear inflation will destroy that promise of growth. $XBI.
As soon as inflation peaks, you will see the rotation begin to move back to growth as value is a bubble. Probably worse then growth was last year. The problem here is the market is sticking with value as it seems the Fed is moving too slowly on getting inflation under control.
This gives you time to sell value, raise cash and slowly nibble away at those growth names while everyone else is scared and hiding in value. I honestly don't know how long it will take to see inflation abate and the switch to flip, but I am willing to buy now and wait.
There is so much value in biotech. The $XBI fair value is probably closer to $110. That is a lot of upside to just wait. There are a ton of bargains in this sector. There are very few that are still expensive. We should all be using these down days to nibble at some.
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