It was supposed to be different this time for biotech stocks. With 60 million baby boomers pushing late middle age, any company that promised new high-tech cures seemed like a guaranteed money machine.

Unfortunately, that guarantee failed to keep biotech stocks from falling by more than a third this year. And lest you think that makes them cheap, let me point out that the biotech indexes still seem richer than the Nasdaq.

But the case against biotech stocks isn't really about valuation. It centers around two more fundamental truths: The scientists don't know as much as everyone thinks they do. And even when the science is solid, the commercial applications won't come as fast as investors seem to hope.

One problem is that it takes an average of 10 to 15 years for a drug to come to market. During that time, new research can often change what scientists believe about a disease. A company could then be stuck with development costs for a cure everyone knows is out of date.

On top of that, the opportunity is often way smaller than you'd expect given the risk.. Scientists estimate that the market for severe psoriasis treatments, for example, could reach $600 million a year. The only problem is, there are 10 companies hard at work in that field. They can't all get rich.

All these risks are doubly high for the most glamorous cure of all-cancer. The disease is proving much more complicated than people thought, and a number of companies that seemed to be on the trail of a cure are trading at a fraction of their peak value. It might not be a good idea to think of them as a bargain.

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