Biotech Values

[DewDiligence]

Given that most major economists--left, center and right--are predicting either a double-dip recession for Europe and the U.S. or extremely anemic growth over the next 18 months or so…

The IMF is forecasting global economic growth of 4.3% in 2011 vs 4.6% in 2010, which is not bad. I posted the details in #msg-52158684.

I’m not unduly concerned about the troubled economies in Southern Europe (Spain, Portugal, Greece). These countries account for a tiny portion of revenue for the multinational companies I follow (e.g. 3-4% for CSCO).

For Europe as a whole, the IMF is forecasting modest improvement in 2011 (1.3% growth vs 1.0% in 2010—see #msg-52158684). If the IMF proves to be wrong, it’s unlikely to be a big problem for most of the companies I follow. For drug/biotech companies in particular, Europe is less consequential than many investors probably think because the profit margins there are generally small.

Where do you see the S&P going by the end of 2010? 2011?

I’m moderately bullish, but I don’t have a specific target for the S&P 500 or any other index.

IF predictions of a double-dip recession (or very close to it) prove true for the U.S. in the next eighteen months, does that in any way affect your investment theses in either biotech, pharma or global resources and, if so, how?

The investing theme I call The Global Demographic Tailwind is alive and well regardless of what happens in the short run to any particular country’s economy. If you have not already read the article in #msg-51490876, now might be a good time to do so. Regards, Dew