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iShares Nasdaq Biotech Index Fund (IBB -1.8%) is down 21% since December 2015 !!!!!!!

Reporter: Aviva Lev-Ari, PhD, RN

UPDATED ON 2/2/2016

The U.S. biotech bubble is a part of the overallU.S. stock bubble that inflated as a result of global central bank stimulus programs, including the Federal Reserve’s quantitative easing and record low interest rates. Lofty U.S. stock valuations helped to create euphoria in various “hot,” market-leading sectors such as biotech. As with the Dot-com bubble and U.S. housing bubble, malinvestments typically build up during a bubble, and biotech in recent years is no exception. The early phase of the biotech bubble’s popping is why there have been scandals in the sector such as Valeant Pharmaceuticals, Theranos, and the Martin Shkreli ordeal. As the biotech meltdown continues to unfold, investors should expect to see many more of these types of scandals.