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Five Things You Need to KnowAbout Biotech: Don't Fall in Love, Overnight Risk, Rules of the Game, Economic Immunity, Get Help


Typical market rules can be useful guidelines, but if you invest here you need to understand things do work differently.


Editor's Note: While we congregate in Vail for Minyans in The Mountains 3, we asked each Professor to prepare some thoughts on fiscal literacy, how to listen to the market and their area of expertise.

1) It is especially easy to fall in love with these stocks, but doing so is a key to disaster.

The "overnight" risk both directions is considerable -- 50-60% on the downside, 20-40% on the upside.

This sector is different. Typical market rules can be useful guidelines, but if you invest here you need to understand things do work differently.

Biotech stocks are fundamentally immune to almost all economic issues, but they are particularly susceptible to changes in investor psychology.

Get help. The more research sources you can add to your own due diligence effort, the more successful you will be.

Random Thoughts

  • Did the FOMC learn not to go too far from the last time they tried to pound speculation out of the stock market as a tool of monetary/inflation policy?

  • Why aren't short sales disclosed the same way long positions are disclosed?

  • Will Reg. SHO finally be given teeth now that more than just the CEOs of a pair of publicly traded companies seem to care about the issue?

  • What's your *ideal* biotech research site look like? And yes, I really want to know! Look me up and tell me while you're here at MIM-3.
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No positions in stocks mentioned.

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