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In this , Tuesday, Feb. 11, 2014, file photo, Federal Reserve Chair Janet Yellen listens while testifying on Capitol Hill in Washington.
In this , Tuesday, Feb. 11, 2014, file photo, Federal Reserve Chair Janet Yellen listens while testifying on Capitol Hill in Washington.
(Cliff Owen/AP)

Why Janet Yellen is wrong about biotech and social media

After Janet Yellen said earlier this month that the valuations on some social media and biotech stocks are “stretched,” investors had a moment of reflection, driving down share prices over concerns that the Federal Reserve chair just might be right.

The Solactive Social Media Index, which consists of companies such as Facebook Inc., LinkedIn Corp. and Twitter Inc., fell 2.6 per cent over three days following the remarks; and the Nasdaq Biotechnology Index (Celgene Corp., Gilead Sciences Inc.) fell 5.7 per cent over three days.