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The Secret World of Biotech Stocks: Beyond Apple and Facebook

February 7, 2024  |  Steven Place
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Have you ever wondered where the fastest stock movements occur? 

It’s a common belief that giants like Apple and Facebook lead the way, but there’s a different sector where dramatic changes happen more rapidly: biotechnology and pharmaceutical stocks.

The Unpredictable Nature of Biotech Stocks

Biotechnology stocks are known for their volatility, but this can work in your favor. 

When positive FDA data rolls in, these stocks can surge dramatically, sometimes by 300-500% in a single day. 

Take Viking Therapeutics, for example. In early 2023, good news sent their stock soaring from around $3 to a high of $25 a share – that’s an astonishing 733% jump!

The Risks Involved

It’s not all roses in the biotech space, though. The sector is fraught with risks. Poor FDA results can plummet a stock instantly. Companies failing to secure funding might dilute their stocks, further driving down prices. The key is to navigate these waters carefully, understanding both the potential and the pitfalls. 

Mastering the ‘Buy the Rumor, Sell the News’ Strategy

One effective strategy in biotech investing is ‘buy the rumor, sell the news.’ 

This involves buying stocks in anticipation of positive developments, not right before they’re announced. 

A great example is Macrogenics (ticker MGNX), which saw its stock rise from $4 to $16 after an earnings report, showcasing the power of anticipation.

Leveraging Insider Insights

We don’t have to be biotech experts to make smart investment choices. Instead, we can look to those who are… 

The insiders

In September 2023, a corporate director’s purchase of 15,000 shares in a company signaled a strong buy to us. 

Following this insider move led us to a whopping 426% return on the stock, and a 712% gain on the simple option play we traded.

The Power of Insider Information

Recently, we’ve identified a promising trade where multiple corporate insiders are buying shares. This company, working on treatments for major depressive disorder and weight loss, has seen significant insider investment, signaling a strong buy to us.

Setting Realistic Targets

With biotech stocks, setting realistic targets is key. We aim for a double on our initial stock investment, with the potential for a 200% return on capital if FDA results are favorable. Options trades could yield even higher returns.

Your Gateway to Profitable Biotech Investing

Biotech investing offers unique opportunities for significant gains. 

To learn more about navigating this volatile yet potentially lucrative market, check out our free, on-demand training.

Packed with case studies from various sectors, it’s a treasure trove of insider knowledge, ready to guide you through bull and bear markets alike.

Click here to access the free training and unlock the potential of biotech investing.

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