Stock Market

[Grejo]

ok for molecular biology class each person is investing 100k into any 10 different companies that deal with biotechnology. and after a couple weeks who's ever in 1st place gets 50 bucks and right now i'm in third. So far i've made over 3k dollars from just one company.


so i was just wondering if any of you guys had insight about certain companies in biotechnology or tips about the stock market in general (except the buy low sell high cuz i know that already)

it'd be nice to get 50 bucks so help me out brothers :D

btw the 100k is fake, the 50 dollars is real.

[CHRIST]

lol that's gotta be a rich school, I don't think my school would ever let us blow 100K that's crazy

[Zabka]

Grejo...I know a fair amount about a lot of biotechnology companies. But to pick stocks for a 2 week period will have almost nothing to do with the companies' businesses, science, etc. and will instead be based on a lot of less related stuff. Earnings season is starting next week (when public companies report their quarterly financial results) and will go for the next several weeks. Most biotech companies do not generate revenue, however, so their quarter reports are more about how much cash they are burning and any updates on clinical progress made by their drugs in development.

If you have any more specific questions about particular stocks, feel free to ask me.

[Grejo]

i know not much progress will happen with this but our teacher just wants to show and teach us how big biotechnology is in stocks and companies. so we're not expecting a huge increase but just a taste.

i've been starting to look in science newspapers and news websites that might give me some recent articles about companies releasing a new drug or maybe losing funds from the government or something.


i guess i just need help with insight stuff in any kind of company that deals with biotechnology.

hell after this i might even put some real money into this. China Shenghuo Pharmaceuticals Industry increased about a 1/4 of what i put into it and it's only a little over 11 bucks a share, so it could be useful to invest in some biotech companies especially if they have spurts like this.



also what's short selling?

[Zabka]

some companies to look into: DNA, AMGN, GILD, GENZ, CELG, AMLN, ALXN, HGSI, ISIS, MYGN, KERX, VRTX, ELN, ARNA off the top of my head all have something interesting one way or another going on.

short selling is when you bet against the stock by borrowing the stock from somebody and selling it....then when the stock goes down, you buy it so you can return the stock to whomever you borrowed. It is a way to make money on stocks you think wont work or when the markets go down. However, unlike going long a stock, your returns are limited since stocks can't go lower than 0 and losses are potentially infinite. Worse is that when a lot of people are short a stock and either good news comes out or the markets just get too frothy, a short squeeze occurs. So next thing you know, there is a stampede to buy the stock by all the short sellers as well as long investors. The stock moves violently upward, often times beyond where it should. The result is massive losses for short sellers.

[Zabka]

I didn't mention BIIB. just didn't type it. Stock is up 16% on news that they are going to put themselves up for sale. That would have been anice one.

[Grejo]

like you said zabka there isn't much progress going on in a 2-3 week period. i was ranked 2nd, then 20th, and now 1st.....let's just hope when the time is up i'm at 1st again

i'm seriously considering investing some into biotech since it's one of the hugest markets.

[Zabka]

Actually, its not such a big segment of the markets. There are only a handful of biotech stocks that one would claim is in the large market capitalization universe, and none of them are at the level of being "blue chip" Dow components. There are some big companies, but you can almost count on your fingers and toes the number of companies that have product revenue. As a result, it is a lot of speculation.

And what I said wasn't that the stocks wouldn't move..I said that the stock movement in a short amount of time is more likely a function of factors that are unrelated or tangentially related to the fundamentals of the company/drugs. Biotech stocks are volatile, so you will see stuff get whipped around a fair amount.

Generally speaking, I don't advise anybody to invest in individual biotech stocks without knowing what they are doing and having access to a a great deal of resources. I think a good healthcare/biotech mutual fund is a smarter way to make money off of biotech growth without the binary risk of the individual stocks. If you choose to play in biotech, you have to be prepared to lose 70% of your value at the snap of a finger...which is fairly common. If you have $1000 invested in a stock that has to halt trials due to safety reasons...after the news comes out, the next trade will likely be significantly lower--I have seen stocks lose over 80% of value in a minute. There are other areas of the market where one can bet on growth instead of betting on clinical outcomes of trials that are really hard to get right consistently.

[AndyPants]

Best place to ask this as any...

Mr Zaba-daba, what dictates when stocks split? I saw that Google broke the 600 mark recently and I know they will take it further.

Point is that you can't get in on many shares at 600+ (least I can't) so when should I be looking for a split and is it really worth it? Are twice the amount of shares on the market the same as what was there before? Enlighten me please.

[Zabka]

Stock splits are determined by the board of directors of a company. Realize, however, when they split a stock, that the value of each share goes down by the ratio of the split. So if you own 1 share at $600, post split you would own two shares at $300 (assuming a 2:1 split). The net result is the same value.

However, stocks sometimes rise in value surround a split because stock splits often occur in order to increase the float (shares that are tradable in the marketplace, not held by insiders) as more investors are able to get involved in the shares, insiders can sell smaller lots of shares than they would have pre-split, in addition to the idea that the split occurs to prevent the price from getting too unwieldy.

For a stock like Google, however, it is less clear if and how they would choose to do it. Google generates a lot of cash, so they have little need for issuing new shares. In addition, in their IPO days, I believe they talked about resisting stock splits and other Wall Street engineering in an effort to "not be evil"---complete BS in my book. Furthermore, Google shares still have a tremendous amount of insider holdings---so to split the stock would potentially provide an opportunity to water that down. Given the amount of control that Google management likes to maintain on the company, diluting their ownership isn't high on their agenda would be my guess.

Please note---everything I have written here is based on stuff that I knew about the company around the IPO and is only my top of the head, no analysis opinion since I don't cover the space. Furthermore, I know a lot of people who work there at various levels---so I avoid the stock in order to ensure that there isn't even the appearance of impropriety. So I don't know much about the stock itself these days.

Did I answer your question, Pants? Not sure if I got at quite what you were looking for.