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Biotech Stocks: High Idiosyncratic Risks, High Alpha?

A 30-year recap

Nicolas Rabener
10 min read
30 May 2022

SUMMARY

  • Biotechnology companies have the potential to change our lives dramatically
  • However, the performance of biotech stocks has been unimpressive since 1993
  • Fund managers have failed to generate alpha in the sector

INTRODUCTION

Most technological change today is an evolution rather than a revolution. Naturally, it is great to have a mobile device that allows instant access to the global knowledge depository, entertainment, shopping, and so on, but most of these innovations have been predicted decades ago by science fiction authors. Reading such novels actually makes human progress seem awfully slow.  Human colonies amongst the stars and interstellar travel still seem ages away.

Aside from building better machines to help us in work and life, changes to our bodies and genes are also frequent topics of science fiction. The progress there seems even slower.

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