I was listening to a podcast this morning on my run when the guest - a market analyst and CFA - said something that almost made me stop midstride. He said COVID-19 was under control in the United States, then it spiked a little and will be back under control again soon. It reminded me of a famous quote popular with boxing fans. Roger Mayweather, former world champion and trainer of all-time great Floyd Mayweather Jr., once quipped, "Most people don't know s%@# about boxing." You could say the same about COVID-19. It seems as though everyone with a social media account is suddenly an infectious disease expert. In reality, we really know very little about this virus. The information on potential therapies, preventative measures and the virus itself changes constantly. So gambling on a biotech stock that claims to have a COVID-19 vaccine or therapy is a sucker's bet. Don't do it. Now, I'm not saying don't play in the biotech space - far from it. Biotech is my favorite sector. No other sector provides such giant gains in short periods of time. It is not uncommon for a biotech stock to shoot higher by 50%, 100% or more on positive clinical trial data, a takeover or another catalyst. But the sector does come with higher risk, so you want to take steps to increase your chances of success. That way, your payoff is big and your risk is reduced. |
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