Biotech Values

[poorgradstudent]

>My question is... with all the day traders and momentum traders looking for events like PARS failure, wouldn't it be a good idea for a previously long investor to:

A) Hold any shares you want to sell until the bounce.

B) Pick up some extra shares on D-Day, then hold for a few days and sell on the bounce to make up a little of the loss from your long shares.<

I interpret your choices as a question of how to trade. I'm not a good trader, so I wouldn't know if or when a bounce is coming, or how big a bounce, etc...

My perspective is that if a biotech has a failed pivotal trial or failed an NDA, then i don't want to be owning its shares, period. So buying after failure is not an option in my book. And guessing about the timing and magnitude of a post-failure bounce is beyond my abilities. But if you consider that most large failures result in a 60% decrease in stock price, is a risky, post-failure trading strategy to recoup 10% of those losses really worth it? In other words, if you're holding a stock that crashes from 10 to 4 dollars per share, is it really worth the additional risk to the downside in order to possibly exit at 5 dollars a share? Up to you, but for me it isn't.

To color my comments, my personal investment account only has biotechs in it. So interpret my comments accordingly.