Don I have to disagree. ARIA was a 5 dollar stock when they signed the deal with Merck, and its now 2.28 even with 534. ARNA was a 10+ stock when everyone is talking about Lorcaserin might cause heart valve SE, and its now 3.8 when the heart valve SE is ruled out completely. Knowing the entry point and how to trade is important since biotech stocks are never valued properly. I have concluded after losing much money that buy and hold doesn't work well with biotech stocks unless you went in at the right entry point.
It's great to understand the science - but I'll guarantee the most succesful investors in biotech aren't necessarily the guys with the phD's and former bench chemists... (the good fund managers just pay them for some advice occasionally or have them on staff)
More knowledge is always better than less knowledge - its that simple - but the right knowledge is invaluable. Also having a good feeling for what "others' understand and what others are pricing in right now is the most valuable. If you can gleam some info which isn't being discounted due to some external facotr - then you may have a great trade. The trick is handicapping what is being priced in and what's not. In the case of ARIA clearly the move from $1.70 --> $2.70 (I am rounding) SOME amount of good news was beign priced in for ASH, therefore how much UPSIDE was goign to be left if everyone who really cared bought in BEFORE ASH expecting some HUGE news?? Conversely @ $1.70 after a 60% paullback from the Augst data highs goign INTO ASH there was a lot of potential upside due to strong data expectations.
The data and the company were the same @ $1.70 11/2 and @ 2.70 on 12/3 the ONLY difference is/was expectations and what was being priced in.
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