I don't understand science so I have trouble following bio tech stocks.....What to do?

Question

I feel lost.

Answer 1

I wouldn't put money in them, then, if you feel lost - except possibly for the mega-caps.

Avoid companies that don't have multiple products in market (not in testing), unless you love the adrenaline rush of pure, unadulterated speculative risk - and are willing to watch a postiion lose 40% of value overnight.

I found this book to be very helpful in understanding biotechnology companies and stocks.

http://www.amazon.com/Alchemy-IPO-Business-Biotechnology/dp/073820482X/sr=8-1/qid=1160012422/ref=sr_1_1/103-2561863-1154260?ie=UTF8&s=books

Answer 2

I would stay out of biotech until you can gain a better understanding of the industry. Visit a biotech company. Talk to their employees. Talk to their customers. Use google to do news searchs on the company you are interested. Listen to the conference calls (usually on the investor information portion of the company website). Read the 10k (SEC filings) and the quarterly earnings reports.

This will give you an idea if the company is doing well or not.

Answer 3

Find somebody who does...OR

On the other hand-- you don't necessarily need to know science. What you need to undertand is the fundamentals of the company, how their products compare with competition, their track record, etc. Basically, you need to understand their business not the inner workings of their product.

People may not know how cars work etc. But knowlegeable bus. folks can say that Toyota does well and GM is in a world of hurt. But they both make cars.

Or buy a biotech ETF or Fund--

Answer 4

http://biotech101.org/ does a great job of explaining the biotech sector and how drugs are made and work. I check it out everyday and it help me even though I am horrible at science.

Answer 5

One important guideline set out by Peter Lynch, a very successful investor in his time, is invest in what you know and understand.