Like many things in life, it all comes down to cost.
No doubt, computer science geeks were dreaming up innovative software applications long before the hardware they needed was available, or affordable. Simply put: The earliest computer chips were prohibitively expensive.
The same can be said for sequencing the human genome. Scientists have long dreamt of unlocking the code of our genetic make-up, which holds the promise that, one day, curing disease will be as easy as flicking a light switch… and, of course, we’ll all enjoy perpetual life at the fountain of youth.
Until recently, the dream of sequencing the entire human genome — let alone developing cures through manipulation of our genes — was just that… a pipe dream. It cost about $100 million to sequence a genome in 2001.
Today, it costs 1/100th of 1% of that… or less than $10,000. Take a look…
The progress made toward realistically affordable gene research and therapy has been spectacular, outpacing the trajectory of progress predicted by Moore’s law. That’s why the emergence of this leading edge of the health care sector caught so many people off guard. It’s also why there’s now a frantic scramble, among companies seeking to profit from this technology, for supremacy and market share.
For investors, this new-industry scramble is a double-edged sword. There’ll be winners… and these will mint new millionaires, just as Google and Facebook have done.
By the same token, there’ll be losers… decimating the investment portfolios of anyone foolish enough to cash in his 401k to plunk it all down on one biotech penny stock.
It need not be that way though. Buying a diversified ETF, such as the SPDR S&P Biotech ETF (NYSE: XBI), is a better option. It gives you exposure to the eventual winners, while limiting the risk of taking a big loss on the losers.
Even still, the price of biotech ETFs have been bid up already — doubling in the past two years, and nearly quadrupling since 2009.
While the biotech boom is poised to last through the next decade, successful investing within the space won’t be as easy as throwing darts at the wall. Avoid the temptation to buy any biotech firm… at any cost.
Instead, continue to follow our research as we dig deeper into the biotech trend throughout 2014. We’re looking for the best of the best… and will work to ensure you get in at a good price.
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