Are biotech stocks too risky for retired investors? Not necessarily. In this Motley Fool Live video, recorded on Jan. 26, Fool contributors Keith Speights and Brian Orelli address a viewer's question about how retirees can include biotech into their portfolios.
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Keith Speights: Brian, I'm going to jump down to a question. It's not ranking as high on the list, but I think it's just such a good question. It's from Karen H. Karen asks, "Is investing in biotechnology considered overall high-risk? Figuring out how to place some biotech stocks in our retirement portfolio to hold 5-10 years. I love learning, want to invest in this sector."
Brian Orelli: Yeah, I think it's high-risk. If it's a retirement portfolio, you want to make it a small percentage of your overall portfolio, and then I think you want a decent sized basket, so you can invest in maybe even 10 stocks and that would be the equivalent of maybe what you would hold for two stocks for something that's less risky in the advantage there is that if one of them goes up a lot, it'll take care of multiple losers in that 10, and then that will drive that part of your overall portfolio.
I think that's probably the best way to think about it for most investors. That's probably the way to go about it, is to have it as a small percentage of your overall portfolio and then within that small percentage diversify more than you would normally for that size of your portfolio.
Speights: I would just add to that. I think those are great comments, Brian. I think I would just add, Karen, that look at the stage of development for the biotech stocks. The ones that are in earlier stage development are going to be a lot more risky than the ones that have either products already on the market or late-stage candidates. There are different levels of risk associated with different biotech stocks.
