Building a Biotech long term portfolio

I am currently reading Ray Kurzweil’s book The Singularity Is Near and I was shocked to read a few days ago that his 2005 prediction that in 10 years (by 2015) we’ll produce age reversal in mice was accomplished in 6-9 years: see here and here, with initial human clinic trials expected in 3-5 years.

The book, whose main theme is the „law of accelerating returns”, is full of ideas that were being researched in 2005 that are about to „explode” into the world. Some of the most interesting of them are in biotech/genes, among others in nanotechnology, robotics and AI.

As the population in the developed world is ageing, I believe the addressable market of biotech innovations will continue to grow. So I become interested to build a long term portfolio in this sector.

As I am not qualified and prepared to research, handpick and actively manage a portfolio of individual stocks, I started to look for an ETF that will offer me exposure to biotech without the pressure of daily managing it.

And this is what I found:

BIBProShares ETFs: Ultra Nasdaq Biotechnology – Overview.

It is a leveraged ETF that aims to duplicate and compound daily twice (200%) the performance of the underlying index (the Nasdaq Biotech Index NBI).

Alternatives considered were PBE, XBI, IBB – but they did not offer leverage. However I am not very happy with the compounding of daily results of BIB, which means that in times of significant volatility I may lose money even when the index is growing slowly. But I chose the leverage in the end, so I selected BIB.

I just placed an order to buy a first tranche today, for a price of around 88$. My plan is to hold it for as long as this market is still in party mode, add another tranche or two in weakness periods, sell a tranche or two if the price goes up significantly by the end of the year, but re-invest after corrections so I will continue to have exposure to biotech for the next 5-10 years.

Traiasca BIB-ul si afacerile lui BIB-u :)

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