Back in August 1997, I found myself on an old Russian military helicopter flying from Almaty, Kazakhstan, over Lake Issyk Kul, on the first ever investor trip to Kyrgyzstan.
It was at the height of the emerging markets boom. Brokers were flying London portfolio managers literally to the ends of the earth, showing us the latest and greatest opportunities on the investment frontier.
It was just as we landed back in Almaty that we had heard that Princess Diana had been killed in a Paris car crash.
As off-the-wall as that trip sounds, there will again come a time when emerging markets will attract the same manic attention of foreign investors.
And as always, fortunes will be both made and lost.
Just two months ago, investors were fleeing emerging markets amid fears about the "Fragile Five" — Turkey, Brazil, India, Indonesia and South Africa. Central banks scrambled to prop up shaky currencies after political and economic concerns led to investors abandoning these markets. And I was writing about why I thought that this emerging markets crisis was a red herring.
Fast forward to today and the "Fragile Five" are some of the best-performing stock markets in the world. In the past month alone, Turkey soared 22.63%, Brazil jumped 20.81% and India rose 9.51%. In addition, Indonesia is up 20.04% for the year.
Contrast that with the fate of investors in the high-flying biotech sector. Since peaking on Feb. 24, the Nasdaq biotech index has tumbled 21.8% and it just dropped below its 200-day moving average.
What Emerging Markets and Biotech Tech Stocks Have in Common
Biotech and emerging market stocks have a lot in common.
Whether it's the prospect of curing the incurable or selling billions of widgets to the emerging middle class, both biotech and emerging markets promise a better future.
As such, they are both tailor-made to be "boom and bust" markets.
Both biotech and emerging markets can languish in the doldrums for many years.
But once sentiment shifts, stocks can run up extremely quickly and fortunes can be made overnight.
I believe we may be on the cusp of just such a phase.