Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money

66% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

  • Tricks

OPTO Sessions Brad Loncar on cancer treatment, Evergrande’s impact and Merck's anti-Covid pill

Brad Loncar – founder and chief executive of Loncar Investments, who specialises in indexing and investing in biotech – believes the sector is too small for the investment excitement it has seen since the start of the coronavirus pandemic.

Positive headlines are misleading, he said. Loncar says that the biotech sector has had a “terrible year” so far in 2021. While there has been a buzz surrounding stocks like Pfizer [PFE] and Moderna [MRNA] for their COVID-19 vaccines, these are not the huge companies that investors tend to put money in. “There's a lot of new biotech investors out there, people throwing money at the headlines, and I think that created a bubble in our sector.”

LISTEN TO THE INTERVIEW:

Apple Podcasts

Spotify

 

Loncar cites the example of the SPDR S&P Biotech ETF [XBI], a large biotech fund that tracks the performance of medium- and small-cap companies. The fund is down 13.1% since the start of the year (through 6 October).

In fact, some biotech companies have had a glut of financing, perhaps ahead of requirements, said Loncar. “Biotech is not a large enough sector, and individual biotech companies… have to be able to take in those kinds of inflows.”

“There have been [more than] 100 biotech IPOs this year, and there were about 75 last year… Over the long-term, that's a good thing. But over the short-term, it's brought in a lot of money, that it's really hard for these companies today to be efficiently priced”

 

“There have been [more than] 100 biotech IPOs this year, and there were about 75 last year… Over the long-term, that's a good thing. But over the short-term, it's brought in a lot of money, that it's really hard for these companies today to be efficiently priced.”

Loncar’s eye remains focused on finding the best in innovation. “The key to investing in biotech is investing in the best science.”

Some of the latest development include Merck’s anti-viral pill, which the company has said reduces COVID-19 hospitalisation by half. Loncar, wouldn’t call this a game-changer, but what makes the difference is that it is a pill, which is easy to administer. It will not replace the vaccine but would be useful in the return to normalcy.

Another key investment area is oncology and the treatment of cancer. Loncar focuses on immunotherapy or harnessing the immune system to treat cancer. Discoveries have been made that were discarded because the target set was too small, but with innovations in gene-related healthcare, some of these may be quite successful, Loncar said.

“Chemotherapy will always be part of the equation… [but for] most things going forward, I think the answer is combinations [of treatments].”

“That's just the nature of China. As an investor, if you're looking for calmness and tranquillity, China's not the place for you”

 

Loncar also has 10 years of experience investing in China. The big debate on how to interpret the Evergrande debt crisis and its impact on regional stocks seemed less worrisome to Loncar. “That's just the nature of China. As an investor, if you're looking for calmness and tranquillity, China's not the place for you.”

News of disruption in China is seemingly constant, and the market will move on from Evergrande like it did after the heightened regulation in China’s education and tech sector, Loncar said.

 

To find out more about Loncar’s biotech calls, listen to the full episode.

 

 

And for more ways to listen:

 

Listen to the full interview and explore our past episodes on Opto Sessions.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

Continue reading for FREE

  • Includes free newsletter updates, unsubscribe anytime. Privacy policy

Free ebook

Tricks of the trade: 7 interviews with the world’s top traders

Get it now

Related articles