miketaylorSA9 karma2015-11-12 19:27:09 UTC
Without commenting specifically on the AVXL situation: Public biotech companies trade on hope and the promise of a substantial future payoff. It's precisely because the craziest ideas sometimes work that a lot of investors can get carried away by stories.
I don't think that small-cap biotech is for the faint of heart. It requires a lot of due diligence, and people get burned even when they're careful. My take: Acting on hot tips is always a bad idea, but especially dangerous in biotech.
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miketaylorSA8 karma2015-11-12 19:21:43 UTC
I think a lot of writers can overlook company fundamentals because they're so focused on the science and the amazing opportunity for advancement. The problem is that the clinical stats can sometimes distract from what might make a company a good or bad opportunity from a business standpoint.
For evaluating clinical stage products, I'd say it's good to start with understanding the disease, or the problem being addressed, then evaluate the market size and level of competition. Ask yourself about the pros and cons of the product, then assess what management has to do to get there. It's absolutely critical to go beyond company-provided sources and to do thorough due diligence to create successful analysis. There are a lot of moving parts, and I think a person has to really study the industry before just diving in.
Finally, I prefer analysis that operates against the backdrop of the risk involved, especially for cash-burning bio/pharma companies that have a long way to go before they ever reach the market. Was that concise? The people will decide.
miketaylorSA7 karma2015-11-12 20:44:14 UTC
miketaylorSA7 karma2015-11-12 19:56:50 UTC
I've never traded on material nonpublic information. In fact I've never traded. I don't even actively manage my investments. I invest in boring old index funds and am content to live off my wages as an editor. Thanks for the question, though, mangist.
miketaylorSA7 karma2015-11-12 20:14:27 UTC
Read financial publications like (plug) Seeking Alpha, The Wall Street Journal, The Economist. Take business-related classes, and save up for college. Build savings so that when you have some ideas worth acting on you have some money to put to work. None of this is personalized investment advice!
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