Welcome back to what I’ve come to think of as the “bad news page.” Like you, I’ve had about enough of being inundated with news of the sagging financial state of the genomics industry, and watching our GTI sink lower and lower.
Sure, we’re in one of the worst bear markets in memory. But historically, bear markets happen far less frequently than bull markets, and are almost always followed by bulls much greater in growth than the bear was in loss.
Popular financial advisor Ric Edelman emphasizes this on his website, including data from Ned Davis Research that shows serious drops in the Dow — 20 percent or more — usually last about a year, and historically have occurred about once every three years. Related information from Crandall Pierce & Co. shows that, in the past 50 years, drops in the market have been offset by subsequent spikes: Based on the S&P 500, the closest margin was an eight-month, 22 percent drop in 1966, followed by a 46 percent rise during the next two years; the widest margin happened after a nearly two-year, 27 percent decline started in late 1980, countered by a 229 percent rise during the next five years. The promise is out there.
So here’s the silver lining: With the entire market limping, expectations are lower, giving genomics a much-needed chance to get its house in order. There’s no room for sloppiness. InforMax recently had to re-release a quarterly report, after coverage of its initial report made clear that there was a mathematical error in it. Or take Human Genome Sciences, which hasn’t updated its website to reflect a significant increase in the number of products in its pipeline — why not? That could actually attract investors. Companies that aren’t prepared for the market to rise surely won’t be able to ride the curve.
Sure, our Genome Technology Index is down 50 percent from a year ago. But the total market cap hasn’t been this high in six months (see table at left). It could be creeping back. And if the sector is going to recover with the coming bull market, companies need to be ready to withstand a whole new wave of investor scrutiny.