Just back from the annual JP Morgan Health Care conference, John Clarke said the mood in San Francisco buzzed with enthusiasm for the technology and life sciences sectors.
Clarke, an investment professional speaking Friday at a panel convened by the New Jersey Technology Council, said there was enough talk of "animal spirits" at the recent four-day conference to fuel talk of whether a bubble is forming. Skeptics use the term "frothy" to describe the rally in stock prices for those sectors.
Clarke said that while 2013 may be hard to beat — an index measuring biotech stocks rose 44 percent last year — the general conviction is that the rally has legs. Capital requirements of life science and technology companies remain vast, plus there is pent-up demand for investment after a long down cycle, he said.
"I think 2014 should be yet another exciting year," said Clarke, managing general partner at Princeton-based Cardinal Partners. "That's good because there was damn near a decade when it was pretty cold out there for these companies trying to get funding."
Clarke was part of a panel at Princeton Westin discussing the technology sector's outlook for capital raising and other trends. He also noted that biotechs led all industries in 2013 both in the number of initial public offerings and in total money raised.
While more early-stage companies inch toward public offerings, an executive of a publicly traded company warned against obsessing over short-term fluctuations.
"Wall Street looks at things on a quarter by quarter basis," said Steven Abramson, whose Ewing company Universal Display Corp. makes OLED display technology used by Samsung for smartphones. "We make decisions based on the long-term needs of the company."
Abramson said that view is ingrained in the culture of Universal Display, a 20-year old company that took 17 years to become profitable. He listed an example of how Universal Display stock – which now trades about $32 a share — fell about 25 percent one day because the company missed its quarterly expectations. The flip side, he said, is the stock can rally as much when results exceed estimates.
"It's a conflict, but we've made a decision to make sure we err on the side of planning the long-term growth of the business," Abramson said.