WSJ's Gregory Zuckerman wrote an excellent column today about investing for the long term.  He points out that while it is fun to make money trading, real wealth is created over the long-term by riding important trends that change our society.  He lists four big ones that he believes will move markets for years to come:  demographic shifts, cancer immunotherapy, energy prices, and low interest rates.

 

Being a biotech investor, I love the analogy he uses for immunotherapy.  He calls it society's next big breakthrough after fracking and horizontal drilling.  Just as fracking has forever changed not just the energy industry but our society as a whole, so might immunotherapy one day.  Some specific names mentioned in the article include smaller companies like Juno Therapeutics (Nasdaq: JUNO), Kite Pharma (Nasdaq: KITE), and bluebird bio (Nasdaq: BLUE). 

 

Here are three quick thoughts that I have about this:

 

1.  He's right about making money over the long-term.  If you agree that immunotherapy is a game-changer, the best way to play this is by building a diversified portfolio of immunotherapy stocks and letting it ride over time.  Picking individual winners is difficult, and there is no sense in obsessing about the daily movements of stocks.  It will be the buy-and-hold investors who make a real killing on immunotherapy if it reaches its full potential.

 

2.  Articles like this show that the word is getting out on biotech.  I've been saying that 2015 is the year biotech goes mainstream.  What I mean by ‘mainstream’ is that some of the biotech innovations happening right now are such big leaps that it is impossible for the general public not to start noticing and investing in it.  The author’s analogy comparing immunotherapy to fracking is fitting because it might not just transform our specific industry, but also society as a whole since cancer is so pervasive.  This has the potential to be a very big deal.

 

3.  How exciting is it to be a biotech investor these days?!?!  It is going to take time for the general public to comprehend what companies like Juno, Kite, and bluebird are working on, whereas we biotech addicts know this secret early.  Imagine if disruptive companies like Google, Amazon, and Facebook went somewhat unnoticed at first because their technology was challenging to understand.  I shouldn't overstate that because most types of immunotherapy are yet to be proven, but it is still pretty neat to have the chance to be on the ground floor of something so promising.

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