"simple way to make money with biotech investing"
"simple way to make money with biotech investing"
How do I make money investing in biotech healthcare stocks?
I wanted to share a recent letter I got from one of our readers. Actually, I get a letter like this one several times a month, sometimes even a few times a week. It has to do with two of the most basic subjects in on-line investing: Good research and good trades.
The name of the person asking the question has been changed, but I promise you that the question is real. I decided to publish this because I understand that many of the novice investors in biotech and healthcare want to know the same thing, but that they may not have taken the initiative to ask for help.
As far as the writers and administrators of this site are concerned, we are all very, Very, VERY excited about this sector and we want ALL of our readers to make lots of money investing and trading stocks. I'm not just saying that, either. Many of us have found that there is no greater reward than in helping someone make money or in teaching them to make money.
"Give a man a fish and they'll eat for a day. Teach a man to fish and they'll eat for a lifetime."
With that in mind, we're going to soon launch some interesting new features on the site. Some of those new features will be interactive and will help our growing community share knowledge, tips and good information.
Remember that countless of millions of new investors enter the market every year in hopes of making money by trading stocks. It is generally accepted that 30% of those "traders" (note that I didn't say investors- there is a difference) will make money in the market and the other 70% will give them all of their money. We want our readers to be in that profitable 30% minority, but we can't do it for you alone. You MUST take the time to learn and invest in yourself as an equities trader before you invest in someone else. Otherwise you will lose most or all of your money.
Now to the letter:
I'm just getting starting to learn how to invest in the biomedical sector and my question is, how do I use your FDA calendar to research or make money? What do I need to do in order to become profitable in this sector? I have lost about $9,800.00 this year so far and I can't afford to lose more.
Thank You For Your Help,
J. Johnson
Ok.. Let's start with the basics.
First, most of us who use the FDA calendar as a research tool assume one thing: "The price of a biotech/pharma company's stock will go up as the key FDA decision date approaches. So one of the most simple ways (and there are several) that investors make money is to buy stocks with pending FDA desicions 1-3 months BEFORE that date arrives.
As the FDA decison date approaches, big crowds of speculators and traders start coming in to buy shares of the same stock and the price of that stock goes up. this occurs over and over again as long as the price of the shares for that company were "low" to begin with. Most are.
You can see a very recent example of this with SPPI. Look at the chart and you will see how the price of the stock rose tremendously in the two months prior to their recent FDA decision. There are many many other examples. Over and over again you will find that this pattern repeats itself.
Sometimes the price will double or even triple BEFORE the FDA decision. The key is that you may want to hedge your bet by buying several stocks and not just one, because you never want to put all of your eggs in one basket. What if there is a surpise or bad news from that stock? Think of it as having a multi-pane window If a baseball or rock hits your window, it will only break one of your panes and not the entire window. Make sense?
Before BioMedReports, investors were paying tens of thousands of dollars a year for this FDA calendar information. We gather, update, organize and make the information available to our subscribers for a very reasonable fee. BEWARE of sites promising free FDA Calendar information. They do not update the data and often publish outdated or flat out wrong information and that will quickly cause you to lose money. Their intentions are often malicious, and while they pride themselves in giving away the information for free, the truth is that they actively hit their members up for "donations" and harvest e-mail accounts and personal data for other uses. Worse yet, they end up causing damage to the bio investment community by flooding the market with bad intelligence. at the end of the day, you get what you pay for.
Remember also that PATIENCE is key. You don't want to rush your investments or trades simply to be involved in a trade. There are thousands of companies in the market and "there will always be another great trade or opportunity."
Our subscribers tend to be very smart researchers who like to make investments with low risk/great upside but most of all you will find that they all share one common trait: Good Patience!
If you're upside down on a trade always remember that you don't actually lose your money until you sell that "bad" stock, so understand the next catalyst and reconsider your position. It may be worth it to hold on for the next event that will bring the stock back. Be patient and smart with your money- especially before you buy into a company.
In order to profit in this sector, which we obviously feel is an exciting sector armed with tremendous potential and many key profit opportunities, you must first get a grasp of some of the basic concepts of biotech investing. I suggest that you pick up and read one of the many great books out there about biotech investing. They are well worth your time and energy to read.
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