Let's look at the upside scenario of your "I'd hardly call it small change" musings.
Imagine you had smartly sold on the way down planning to buy back in the target zones so clearly laid out on the carefully crafted TA chart.
Of course you still have a core position in Anavex, which could be perhaps half of your maximum Anavex exposure and the other half ebbing and flowing as trading shares. Let's say this now means 10,000 core shares held and the other 10,000 sold on the way down from your favourite resistance zone.
You have minimised your losses, but making them real, but soon you will have your max position back and cheaper. Others with a comparable 20,000 share position who just held on tight would have lost, on paper that is, say a 1/3 of the value.
Then one morning when you least expect it, news hits the screen: "Anavex inks licensing deal with Biogen for MS securing $1B in upfront payment and 30% of future world-wide revenues". BAM!
The PSS skyrockets to $43 in a manner of hours. Those who sold their trading shares would still be quids in by a great margin, but in this fictitious scenario only half as much as those who just held tight ($430K versus $860K, when starting from a high of $124K for the position assuming PPS topped at $6.2), minus of course the realised loss from the trading shares.
All depends on your personal risk management and investing style. Personally, I accept the risk and fun of very volatility Biotechs, which are often associated with binary outcomes. I never short (don't like gearing or the risk of loosing more than I put in), but try my best at doing DD on the science, management and finances. Make sure I have a balanced portfolio constructed so that a couple of winners easily makes up for the losses of the rest (obviously more than 2 out of 10 is desirable).
I am not saying one approach or the other is long term better. Perhaps adopting the core position with cleverly executed trading shares scheme can make for a less volatile ride. Maybe doing good DD and just holding is best and doesn't glue you to the screen, so long as you don't loose sleep over looking at your large portfolio value swings.
Has anyone done the research and written a thesis on the comparison of these strategies?
