Why Biotech Is an Excellent Contrarian Play Today
Stansberry Investor Hour
Stansberry Research
4.4 • 677 Ratings
🗓️ 18 March 2024
⏱️ 60 minutes
🧾️ Download transcript
Summary
Dan and Corey kick off the show by discussing both bubbles and "anti-bubble" stocks. Dan
mentions how the S&P 500 Index's cyclically adjusted price-to-earnings ratio, with data
going back to 1871, is currently in the top 1%. He even believes this is the biggest mega-
bubble in all of recorded history. (0:41)
Next, Porter & Co. analyst Erez Kalir joins the conversation and shares his financial
philosophy. He talks about investing legends who have influenced his investing style, the
importance of avoiding labels, and how successful investing is similar to using a Swiss Army
knife. Plus, Erez explains the yin and yang of macroeconomics versus security-specific
fundamentals and how there are extreme periods where one can entirely dominate the
other. (13:00)
After, Erez goes into detail about biotech – the sector's history in the stock market, how it's
shaped by interest rates, and how you can find companies trading at an extreme discount
with negative enterprise value. He argues that not being able to time the markets is merely
a myth, and he shares the seven factors he uses to evaluate whether a biotech stock is
worth buying. (21:59)
Lastly, Erez explains why the conditions are right for biotech stocks today. He covers the
sector being hated and how this gives savvy investors a chance to break away from the herd and profit. (38:36)
Transcript
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| 0:00.0 | Hello and welcome to the Stansberry Investor Hour. |
| 0:05.6 | I'm Dan Ferris. |
| 0:06.6 | I'm the editor of Extreme Value and The Ferris Report, both published by Stansberry Research. |
| 0:12.6 | And I'm Corey McLaughlin, editor of the Stansberry Daily Digest. |
| 0:16.3 | Today we talk with Eres Collier, a porter company. |
| 0:19.5 | And Corey and I will talk about the Schiller- ratio, NVIDIA's sky high valuation, and other |
| 0:25.7 | bubbly things. And remember if you want to ask us a question or tell us what's on your |
| 0:29.5 | mind, email us at Feedback at InvestorHour.com. That and more right now on the Stansbury |
| 0:36.0 | Investor Hour. |
| 0:58.8 | Yeah, let's talk about bubbles because I caught a little quote by Jeremy Grantham in the news past few days where he was saying that the Schiller PE ratio, the sort of cyclically adjusted inflation adjusted adjusted PE ratio of the S&P 500, it's 34. |
| 1:00.7 | It's actually above 34 as we speak. |
| 1:09.5 | And he says that's like the top 1% of all the history of it, which the history of that ratio goes back to 1871. |
| 1:13.6 | So, you know, I'm just saying it's an expensive moment. |
| 1:16.7 | I think it's the biggest mega bubble in all recorded history. |
| 1:21.7 | And I've said that many times here and in the digest and elsewhere. |
| 1:26.1 | And, you know, these things, it kind of bothers me. |
| 1:28.0 | It makes me worried. |
| 1:30.1 | I usually don't care about the overall stock market, |
| 1:38.1 | but this mega bubble thing, it just kind of sticks in my craw and makes me worry about the kind of risk that people are taking. |
| 1:40.3 | The valuations are bothering. |
| 1:44.1 | At top of that, yeah, they are. They're bothering me. It's like, you know, |
| 1:46.2 | if you pay, you know, 10 bucks for a stock that has, you know, a dollar in earnings, that's 10 |
... |
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