BIOTECHS FAST APPROACHING 2020 LOWS: WHAT THE FUCK IS GOING ON HERE?

I will tell you exactly what’s going on because it’s exactly what happened after the dot coms BLEW THE FUCK UP in 2000.

In Stocklabs we have over 650 biotech stocks listed, most came public over the past 5 years. The overwhelming majority of these stocks are complete shit and should not be public. They are public because they require funding and have enjoyed unprecedented valuations. In a bull market, anyone can tap markets for cash, either through debt or equity offerings. After the dot com bubble BLEW THE FUCK UP, all of the dot coms who relied on markets for cash went to zero. They lost funding, burned out, closed down.

Period.

The market is pricing in the CLOSURE OF CAPITAL markets for unprofitable shit stocks. When you have stocks like AMZN off by 30% YTD, believe me no one gives a fuck about your cure of herpes.

This logic applies to all stocks. If you own a stock who is free cash flow negative, prepare for lower prices. Many of them will successfully do dilutive equity offerings. Very few will tap bond markets; and a number of them will pursue alternative sources of funds with fucked covenants with warrants attached — aka death spirals.

Out of all the sectors of the market — nothing has been hit harder than both biotech and tech and it’s for these exact reasons why CPB and KHC are doing so well in comparison.