Investing in biotech stocks - My experience so far

atush

I think a small position in Biotech isnt a bad idea, if like the OP you are prepared to lose your shirt.

I myself was a research Biologist (viruses). I worked in the us public sector (the NIH). I am keenly interested in the area.

But if/when i invest i would use ITs as in the above post.

BrockStoker

SonOf wrote: »

Biotech funds can double in a year and lose 90% of their value just as quickly. They are right off the scale (in isolation of other investments) and best held in small quantities as part of a balanced portfolio.

In general, I would agree with your statements above. However, I think that because biotech is largely ignored by investors for the above reasons, there is a bit more of an opportunity than other sectors, at least for those that are able to make some sense of a complex sector.

In my own case, as I have said before, the vast majority of my wealth is held outside of the biotech sector, and my investment in individual biotech stocks makes up no more than 2-3% of my total wealth.


-


Will be back later (market open soon) to reply to everyone else.

Radiantsoul

I think you will be in for quite a ride.

I think that although there are a lot of new smaller companies buzzing around various niche treatments that does not mean they will supplant big pharma. The large established companies have well established regulatory, commercial, pricing and access teams, manufacturing, distribution, finance, etc. This makes it quite hard for new companies to break into the sector, perhaps the most obvious exit for biotech investors is a sell to large pharma. I guess the future benefits of the drug will be split between the biotech shareholders who cash out and the pharma investors who are buying in.

The risks of investing in a company with one product that is potentially large, but with a high chance of failure is obviously that the product will fail. Or it will be second or third to market. Or something will go wrong with patent. Or a better product will come along. Even if these companies have success they will need more and more capital. This may mean diluting your interest or selling of the assets to big pharma at a price that depends on what the market will bear at the time rather than the long term profits available.

I think at 2-3% of your wealth it is fine, and if you enjoy it, why not? I think there is a very real change that it might fall to a much smaller part of your wealth and that is something that few people are happy to accept.

benbay001

I think this is exactly why most people say that picking individual companies is fool hardy and you would be better off in an index.


From your post I feel you have literally just picked a sector you like and bought a load of stocks.


Have you got a single stock that has ever turned a profit? How many annual reports have you read?


What are you bench marking your returns against and how has it done over the same period?


For reference, im up circa 20% in the last month on my 3 stocks. An airline, an equipment hire company and a car parts company.

atush

Have you got a single stock that has ever turned a profit?

I'm thining you havent read the thread. OP has taken profits (100% of buy in costs) from one already.

benbay001

atush wrote: »

I'm thining you havent read the thread. OP has taken profits (100% of buy in costs) from one already.

Im asking whether the companies have turned a profit, not the OP.

If you own 20 stocks and none of them are actually viable businesses and your only hope is that one produces a wonder drug then really its just a gamble

Another point OP. Do you have a price for each of the companies, that if it reached that price today, that you would sell? And what do you base that price upon? There is no stock in the world that you shouldn't have a sell price for as every stock has a price at which it would become grossly over valued based on its current and future prospects.

dividendhero

Even if you know a particular biotech company and it's potential product in great detail and even if they've got the technology etc right...there's always the risk that another company off your radar has developed a better product

EdGasketTheSecond

He's a budding Woodford

atush

atush wrote: »

I think a small position in Biotech isnt a bad idea, if like the OP you are prepared to lose your shirt.

I myself was a research Biologist (viruses). I worked in the us public sector (the NIH). I am keenly interested in the area.

But if/when i invest i would use ITs as in the above post.

PS i am already exposed to big pharma and may have smaller exposure in some ITs

Thrugelmir

EdGasketTheSecond wrote: »

He's a budding Woodford

Easy to be dismissive. Without the likes of Woodford. Good commercial ideas will simply end up in the hands of overseas investors. Woodford is merely the public face. I was fortunate some years ago to co-present at a real Dragons Den. There's serious institutional and private money looking for small companies that offer concepts with scalability. Ground floor investing is the place to be.