Avoid Big Losses With Biotech Stocks by Paying Attention to These 2 Things
Investing in biotech can sometimes feel like a roller-coaster ride. It's fairly common to see your shares soar by 30% or more in one day after a company reports positive clinical-trial results, only to see them plummet the next day. Of course, there's no guarantee that you'll get the joy of seeing a sharp uptick in advance of a steep drop, which complicates matters further.
There's no way to predict the future, but by paying attention to two key pieces of information, you can guard yourself from at least one cause of brutal losses. Here's what you need to know and what you need to do.
As you probably know, it takes a lot of money for biotechs to do research and development (R&D) activities that eventually have a chance of yielding medicines or technologies which can be sold for revenue. Early-stage businesses won't have any inflows of cash as they don't have a product that's approved to sell. Therefore, the first thing you need to pay attention to in order to avoid big losses is how much cash your holdings or prospects have on hand.
Source Fool.com
