Afternoon everybody.... How to survive in Biotech investing....? Wouldn't we all like to know the answer to that question...
Especially after seeing plenty of high flyers crash over the last year... Here are a few of my recent thoughts..
1. Having a one stock portfolio is just deadly especially in Drug Discovery... Look at PBT PRR And QRX holding too much in these companies would have been a seriously bad move... That also goes for devices and applications, look at ISN... Somebody bought them at .85....
2. Finding companies with very good management is another trap for young players... And old ones too... And more recently there is a trend to bring young investment banker types onto boards... Young and aggressive they go for a much bigger level of influence than their ability can support... So its time to be ruthless weeding out shares where the board has the wrong structure.. Look how many times companies announce a new more with better skills to take them forward.. A three yearly event...
3. A companies ability to find capital at a good price is another consideration... But i am clueless here, except to say that many seem to double the shares on issue at multi-year lows... Or if they do get a run up going, they manage to stop it on its tracks with a cap raise.....
4. General business skills.. Just like fruit shops,bios to need a level of business acumen... My advise is to invest in fruit shops, because biotech companies do not understand this basic elementary principle...
5. Understanding the science... Well thats hard....really hard... Best to get to know your lead scientist and ask your questions directly... There are some amazing posts on these boards by some obviously brilliant minded posters.... But it is still not the same as the horses mouth.. And there is an old saying, a wise person is always questioning, an idiot is always certain about everything... There are also experts on here who get plenty wrong in their field of expertise... So get to know your companies lead scientist..
6. Listening to my gut.... Everytime i doubt my gut instinct i get burned... So whilst this is basically a science forum that deals in proven facts, i will upset the highly technical minds by suggesting listening to my gut works much better that hard facts.. Maybe its because there is so many factors at play, beside the science.. Market sentiment being a main factor...
7. Emotions.... Getting emotions under control is IMHO the smartest thing a bio investor can do... Because negative emotions can often be irrational and cost money.... Positive emotions can be even more irrational and cost even more money.... It felt great to be able to take a big hit on PBT recently and fall asleep a few minutes later and sleep all nite... Rather that grind myself to bits for weeks... And when a big win comes in, a lack of emotional response helps me take profits....
Where to from here with my investing after a hugely volatile year....
Keeping a good balance of companies to achieve my objectives is still a strong theme.... Building a strong portfolio that works has been a high priority for the last few years... Refining and perfecting that portfolio mix is my ongoing theme from here.. It has worked exceptionally well over the last few years.... When i keep to strict trading practice of taking some profits and moving them into diversified stable investments... And building on the knowledge gained to grow a bigger and stronger portfolio....
This is just some of my ramblings, it helps to write them down to keep clear on my objectives and strategies, so that I do survive and prosper here... The challenge is just so addictive...
