# Best account to keep US speculative stock in?



## LionMG (Dec 21, 2012)

I'm a beginner investor, but I'm looking to start things off with a bang with a small position in a risky stock that should either skyrocket or plummet in the near future. Don't worry, the rest of my portfolio won't be nearly as risky. :love-struck:

 Now I'd like help in knowing which of my accounts would be best to purchase the shares in. I have room in my TFSA. Keep in mind it's a US stock. 

As far as I understand from my research so far the benefits of each would be:

TFSA:

- Tax free gains. I'd love to be able to expand my TFSA room early and then stick safer dividend payers in it, getting them compounding early on. Tax free dividends is my long-term investment strategy. I definitely won't want to be doing trades like this often. 
- A negative would be that I'm with TD Waterhouse so I'd have the conversion rate to worry about, because TD TFSA can't hold US dollars.

Non-registered:

- No need to worry about losing my contribution room permanently if the stock goes south
- If it goes south I have capital losses I can use in the future to off-set gains. 
- Favorable capital gains tax rate (compared to RSP). 
- US dollar account, no need to worry about conversion. 

So I guess it's just a question of whether I want to risk the TFSA contribution room? Or are there any other considerations?

Any advice would be much appreciated, thanks. :chuncky:


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## Sampson (Apr 3, 2009)

Sounds ilke you understand the benefits and risks quite thoroughly.

How confident do you feel in your speculating?


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## humble_pie (Jun 7, 2009)

no advice but perhaps a stray crumb or comment ...

picking the stock for tfsa that will go to the moon in capital gains is certainly the tfsa 22-carat gold strategy. But the risk is ... ok, you know the risk.

it's hard enough to pick that single winning stock. I for one would not handicap it by doing USD in a td waterhouse tfsa, for all the reasons that you've mentioned. I'd stick that potential winner in a plain tdw USD cash or margin account. I'd find something else in CAD for the tfsa.

btw i thought you were doing ABX in tfsa ? barrick imho is not a stock that's going to "skyrocket or plummet in the near future," it's more likely to plod i believe. Pascua lama overhang is likely to last for years to come, don't you think. So i'm assuming the red-hot candidate is another company.


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## LionMG (Dec 21, 2012)

It's not ABX no, although I am putting ABX in my TFSA. That I don't expect to skyrocket, but a target of $45-50 is my hope. I'm taking a larger position in it than this much riskier stock.

I'm not entirely confident in this speculation. The stock is CLSN. It hinges on scientific test results. 

The conservative part of my brain says to keep it in non-registered, but the devil on my shoulder is saying "think of the expanded TFSA room for tax-free dividends if it sky-rockets! It's only a small amount of space lost if it fails!".


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## humble_pie (Jun 7, 2009)

LionMG said:


> I'm not entirely confident in this speculation. The stock is CLSN. It hinges on scientific test results.


oh dear. I was afraid of something like this. Where is toronto.gal. We should give you The Talk about buying these emerging pharmas as they run up to FDA approval date & all the hype goes haywire. 

see, the proper way to do it is to buy em long, long, long ago. When nobody ever heard of em except the pros. When the brand-new med first came out of the university research labs. In clsn it's the pros who are selling now, the trick is to sell emerging pharmas on the cusp of FDA announcement when froth is at its most frenzied.

last week an option expert in chicago was telling me about CLSN, how the february straddles are. the. same. price. as. the. stock, which is not a good sign. He was incredulous.

in her research, t.gal looks for details such as: does this pharma have a history of previous FDA approvals ? if so, chances are better.

there is an FDA committee that studies the testing progress of these pharmas as their phase applications make their way through the bureaucracy & this committee publishes at least some of its deliberations as minutes ... have you studied these ... t.gal reads these ...


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## underemployedactor (Oct 22, 2011)

CLSN was downgraded by Brean Capital last week. I'm all for dirty little stocks for fast gains but the story is over on this one I'd say. Sniff around for some oil and gas juniors, they are always more fun.


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## kcowan (Jul 1, 2010)

Always in non-reg. The losses are deductible. The gains are taxed at half.

A guaranteed winner goes in the TFSA. Not CLSN!


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## Toronto.gal (Jan 8, 2010)

LionMG said:


> 1. I'm a beginner investor, but I'm looking to start things off with a bang with a small position in a risky stock that should either skyrocket or plummet in the near future.
> 2. I have room in my TFSA. Keep in mind it's a US stock.


*1. *You're a beginner, but wanting to play dangerously right off the bat, albeit with a 'small position', so you're not all crazy. 

But you still need to know what you are buying. The stock in question, in case you had not yet noticed, has already skyrocketed! And not only that, but the 'near future' you mentioned, is supposed to be later this month I believe, so you're late in the game IMHO.

52 week low/high = $1.63/$9.44, so the stock has already rallied over 480% since just Jan. 2012, and purely from anticipation, so how much upside do you believe there is left that has not already been priced in? That's the question you need to ask yourself.

Do you know what is the company's perceived worth, if ThermoDox were approved? Do you know the announcement date [often times we know this in advance]. And if it does not receive approval, what other drugs do they have in the pipeline & at what stage & for what? As HP mentioned, what is also good to know, is whether company has received prior approvals. No guarantee for future go-aheads ofc, but it's information that you should still be familiar with. You are also aware that rejection will potentially mean a return to Jan. 2012 prices, right? 

I'm awaiting approval this year for one of my stocks as well, but I bought in 2012 at $1+ and is currently nearing $3, and have naturally booked profits along the way. This same company, however, had failed to receive FDA approval for another drug in 2012, hence it fell from $5+ to $1+, but though I had shares at that time as well, I had sold most of them just prior to FDA announcement, and so the profits made, covered for the unrealized losses. 

Anyway, the surest way to quickly reduce your TFSA contribution room, is by investing in stocks with extremely high risky fundamentals that most likely you don't even understand for now.

Having said the above, if such stocks truly interest you for more than just the potential returns, you could get your feet wet by plotting a fairly conservative approach with such stocks, and by simply starting to follow in the early clinical stages, ie: in the recruiting/Phase I process, instead of III [the latter should be for more aggressive/experienced investors in this sector], as by doing so, you're obviously buying at much lower prices/lower risk capital & before huge rallies have already taken place, hence limiting the downside, rather than the upside potential. Still, I would not recommend these stocks, unless you have time for a lot of reading, and not just newspapers articles, but sites, like FDA. 

*2.* Definitely in non-registered accounts! There are plenty of solid/undervalued/volatile Canadian stocks to make your TFSA grow! 

Good luck!


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## humble_pie (Jun 7, 2009)

t.gal would you happen to have the link to that FDA committee that monitors applications as they progress from phases I to III ? u remember we talked about it over a year ago ... would be nice if u are able to post it ...

lion may be a new investor but he is to be congratulated imho for analyzing his risks so well. True, it led him to the last-minute CLSN FDA fireworks & he was tempted. But he had enough sense to stop, look, listen & ask questions.

carry on lion, sooner or later you are going to hit bonanza !

ps i agree with actor, it's easier to find good emerging oilcos (& discard the pumps) than it is to find good emerging pharmas.


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## Toronto.gal (Jan 8, 2010)

humble_pie said:


> 1. lion may be a new investor but he is to be congratulated imho for analyzing his risks so well.
> 2. t.gal would you happen to have the link to that FDA committee


*1.* That is why I implied that he was just 1/2 crazy. 

*2.* The FDA website is full of information & gives access to several links, like the advisory committee, clinical trials, etc. 

The FDA uses said committee for input regarding the assessments made by the agency reviewers. 

The drug in question, however, does* not* seem to have been submitted for FDA approval yet, as I only found a National Clinical Trial # [NCT] as opposed to a New Drug Application # [NDA], but I'm not saying that an NDA does not exist, as I just took a very quick look & did not find any.

*- Clinical Trials link*
http://www.fda.gov/ScienceResearch/SpecialTopics/RunningClinicalTrials/default.htm

*- How to Read Study Records*
http://www.clinicaltrials.gov/ct2/help/how-read-study

*- How to Find Results of Studies*
http://clinicaltrials.gov/ct2/help/how-find/find-study-results

*- ThermoDox - NCT00617981*
http://www.clinicaltrials.gov/ct2/show/NCT00617981?term=thermoDox&rank=4

You can also view previous/next studies from above link.


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## LionMG (Dec 21, 2012)

At least I'm only half crazy. :biggrin:

Thanks for the replies!

I am still quite tempted. What is influencing me are articles on SeekingAlpha and reading comments on the potential conservative upside of $50+ if the results are positive. Or is that a fairytale?

From reading the science and seeing the potential, revenue that could be generated if the results are positive...(and hopefully to help sick people too).


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## humble_pie (Jun 7, 2009)

lion somehow i reckoned you'd end up w this feeling. You have not been foolish or reckless & you have worked hard to calculate the risk ... & you did say you intended to hedge by only taking a small position ... sometimes i think the only way to learn is actually to buckle down & learn ... so perhaps you could go ahead after all.

if all shall be lost, then you will know in your gut exactly how it happened & you will never forget. This is better than a whole pride of mama lionnesses nattering at you.

if all shall be won, none will be happier for you than the mama lionnesses, of course.

just one final caution. You see how results are expected late january ? there are, of course, no results from the new business deal with hisun of china. As a matter of fact it's on this hisun news that my eyes start to glaze over, because there are so very many china stories that end up going nowhere or worse.

i'm not crazy about celsion's medical officer either. The one who couln't get into any US medical school.

just be sure to keep the purchase small. EDIT: note that everybody says buy it in non-reg'd.


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## Toronto.gal (Jan 8, 2010)

LionMG said:


> comments on the potential *conservative upside of $50+* if the results are positive.


And that *'if' *is a gigantic one btw! 

Do you know how many drugs are approved by the FDA? Many drugs complete Phase III studies successfully, but that's the easy part, however, *getting FDA approval to market/sell the drug* is an entirely different ball game, and one in which most drugs do fail the agency's clinical review of safety & efficacy. There are also times when a drug may not be rejected outright & is allowed re-submission at a later date, if concerns can be addressed/resolved, but when this happens, it might as well have been rejected, as that is how the share price would react since re-submitting would not guarantee approval either. 

That *'conservative'* return from just a year ago, would be 3000%! Are you expecting this in the 'near future', as in 2013? I have been thrilled with single/double/triple digit returns [before & after approval], and though I would not mind a 3,000% [I would even settle for 1000%], I'm not holding my breath. 

Good luck with quadruple digit returns, just don't do this:


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## Sampson (Apr 3, 2009)

I never figured out what I would do if I won the lottery, that picture just inspires me now.


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## Toronto.gal (Jan 8, 2010)

Toronto.gal said:


> I'm awaiting approval this year for one of my stocks as well, but I bought in 2012 at $1+ and is *currently nearing $3*.....


When I wrote the above yesterday, the stock was trading @ $2.99; later that day, it closed at $3.36, and today is trading @ $3.81 as I write this & based on nothing but momentum, [though still about -30% from its 52 week high]. But I have known, and been following/studying this company for almost 3 years, and have made most of my profits BEFORE any FDA announcements, which have been negative thus far by the way [but always keeping a small % of *free* shares for long-term, just in case its drugs get marketed]. 

I won't give you the name of the company as you're late in the game, however, my point for mentioning the above, is that: *1)* for you to pick the winning pharma stock right off the bat, is highly unlikely, or you'll be a very lucky person, and that *2)* profits can still be made if you take a conservative approach & find the right company, at the right price, that will have successful clinical trials to Phase II or III at the very least.

No free lunches; you need to do your homework & not merely seek Alpha to make it big in this trickiest of sectors. 

But if the above hits $50, I'll be your biggest fan. :encouragement:


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## LionMG (Dec 21, 2012)

Well I haven't pulled the trigger... yet. :biggrin: But if I do, it'll be an even smaller position than I had first planned, and in my non-registered. Thanks for the advice!



Toronto.gal said:


> *2.* Definitely in non-registered accounts! There are plenty of solid/undervalued/volatile Canadian stocks to make your TFSA grow!


 Can you recommend somewhere that has a list of speculative Canadian stocks I can check out, with detailed analysis? I unfortunately don't have the time to do in-depth research myself, so I rely on research from articles and comments, then go based on my gut feeling as well (such as the case with RIM when I had a strong suspicion it'd rebound from $6).

I want to establish small positions and then just hold long (until it hopefully shoots up a lot), not worrying about having to check it every 5 minutes and selling on a temporary spike. I have a medium-high risk tolerance.


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## LionMG (Dec 21, 2012)

Upon advice here and further research I've decided against Celsion. I'm going to pretend as though I bought the shares though and track it for fun/learning.

My new consideration is MannKind Corp. (MNKD). If the price rises as Celsion did toward the FDA test results, I'll have a big decision on my hands whether to hold for the results or sell in anticipation. But at least there is the potential for two upsides compared to Celsion, so a little less crazy?

I don't know, we'll see. It'd only be a small position. But I might just avoid biotech altogether as I don't have the time to research too thoroughly and get in real early. 

Anyway thanks again.


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## GoldStone (Mar 6, 2011)

LionMG said:


> But I might just avoid biotech altogether


Good idea. IIRC, FDA rejects far more drug applications than it approves. The odds are stacked against you.


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## Toronto.gal (Jan 8, 2010)

LionMG said:


> 1. I'm going to pretend as though I bought the shares though and *track it for fun/learning*.
> 2. If the price rises as Celsion did toward the FDA test results, *I'll have a big decision on my hands whether to hold for the results or sell* in anticipation.
> 3. But I *might just avoid biotech altogether* as I don't have the time to research too thoroughly and get in real early.


*1.* This is a good idea, but to actually learn, you'll need to do more than simply track the price.

*2.* As previously mentioned, most drugs don't get approved, and even after they get approved, they can still fail as there is also a Phase IV to worry about.
http://www.nlm.nih.gov/services/ctphases.html

The decision to sell or not, need not be agonizing. If you want to make returns, then it's simple; OTOH, if you want to hit the lottery [which is possible], then good luck with that! I follow a mixed strategy, for example:

Excluding commissions:

- buy 500 sh @ $1 = $500 investment
- sell 300 sh @ $2 = $300 profit
- hold 200 sh @ $1 = $200 investment
- stock goes to $0 = -$200 loss
- stock rises to $10 = $1,800 profit

I do the above until I further reduce my investment, but increase my holdings as well.

Now do the above example starting at $7 and see what your gains/losses would be, but remember that going from $1 to $2 is not the same as going from $7 to $14 [not all 50% increases/decreases are created equal].

I do agree with HP that you can only learn with practice, so nothing wrong experimenting/learning, but even better if you can first test your investing skills with stable investments before you get into riskier ones. 1, 2, 3, instead of 3,2,1. 

As for sites with 'detailed analyses', there isn't a single magical site that will provide you with all the information you should know, so you have to search & find the ones [sites & writers] that you can trust & understand, but before you can do that, you need to know how to analyze aspects of the company yourself, like calculating ratios, understanding quarterly reports, etc.

*3.* Or at least don't rush just yet.

Whatever you decide to do, good luck!


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## humble_pie (Jun 7, 2009)

lion in mannkind i'm wondering what caused that prominent triple top between april/09 & feb/11 ? especially what caused that final plunge from jan/11 (9.64) to feb/11 (3.65 only one month later) ?

answers might show why co has such an erratic performance

i mentioned upthread that actor has a good point when he says exploration O&G & even exploration miners are somewhat easier to pick over than emerging pharmas


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## lonewolf (Jun 12, 2012)

Lion

I would only use the TFSA for the best of the best setups for placing a trade. If an investor already has capital gains it is even more important because if you lose you wont be able to claim the losses. Since stocks are taxed favourably I think they are best held outside a registered account & save the TFSA for something like GICs. Someday interest rates will likely be higher & you might want to make certain you never gambled away to much of the money that can be held in a TFSA.


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## Toronto.gal (Jan 8, 2010)

My pharma stock I was referring to upthread, was up 50% earlier this morning, and this time was on actual news, that Phase III results of the drug Zerenex, which is for the treatment of end-stage renal disease [studies which began in 2008 btw], were successful. 

http://investors.keryx.com/phoenix.zhtml?c=122201&p=irol-newsArticle&ID=1778277&highlight=

Now that the last clinical trial was successful, the process of applying for a new drug + market authorization application may begin, but like I mentioned previously, successful Phase III trials do not necessarily translate into FDA approval. Last year the company completed successful Phase III results on another drug [Perifosene], but failed to receive FDA approval, and share price quickly went from $5+ to $1+.

As you can see, you can still invest/follow before approval, but only if you buy the stock very early on as I did when the stock plummeted from $5+ to $1+ last April, hence, after 9 months, I have sold a position this a.m. at over 200% [but keeping a small % for long-term just in case the approval does go through]. And previously, I had held closer to 2 years before selling most of my shares before the rejection of Perifosene.

2013 is looking good thus far! 

I disagree with comment above to use TFSA for GIC's [unless those funds are needed in short-term].


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## LionMG (Dec 21, 2012)

Awesome news for you - congrats! 

I really like that strategy, great idea. I'd probably keep something like 40% depending how good I feel about it. We'll see though, I just hope to be in that position to decide! 

I should mention I took a small position in Inovio Pharmaceuticals (INO). They have a lot of potential catalysts upcoming in 2013.

I'll see how this goes and decide if I'm staying far away from bio stocks from then on. :biggrin:


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## avrex (Nov 14, 2010)

Nice job, T.gal.
I was also able to make 'some' money on KERX, on an option that expired two weeks ago. But not as much as you made. 
Congrats.


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## Toronto.gal (Jan 8, 2010)

I'm glad that you also did well *avrex*. When did you start paying attention to the stock? 

*Lion:* KERX was the 1st pharma stock I ever laid eyes on back in 2010, so I have been lucky with it as I have married to it for almost 3 years now, but *not lucky due to any FDA approvals* thus far, and that was the point I was trying to make. The sector is interesting if you have the stomach for it, but more importantly, if you have interest & a basic understanding in medical research. I have picked other stocks that received FDA approval, like the latest anti-obesity drug from ARNA, but none have gone to the moon, so you always need caution with these, ie: book profits to cover/reduce your capital risk. For me, these stocks have taught me a lot, and I mean much more than mere $$s.

Yesterday was such a wild day; I had not expected a near 100% increase on a single day for just a successful Phase III trial, hence, not only did I sell 75% of my 2012 position, but I was able to day-trade it as well [2x]. :biggrin:

I don't follow INO, but I will take a look at their current three Phase II studies. Interesting vaccine programs. 

Good luck with it and keep us posted!


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## kcowan (Jul 1, 2010)

Great discussion on momentum investing. Should be a sticky.


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## Toronto.gal (Jan 8, 2010)

KERX is up another 30%! 

I forgot to mention that those following pharma stocks, should also pay attention to other sites like EMA, as what they approve/comment/conclude, also affects share prices significantly.

http://www.ema.europa.eu/ema/


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## humble_pie (Jun 7, 2009)

Toronto.gal said:


> KERX was the 1st pharma stock I ever laid eyes on back in 2010, so I have been lucky with it as I have married to it for almost 3 years now, but *not lucky due to any FDA approvals* thus far, and that was the point I was trying to make. The sector is interesting if you have the stomach for it, but more importantly, if you have interest & a basic understanding in medical research. I have picked other stocks that received FDA approval, like the latest anti-obesity drug from ARNA, but none have gone to the moon, so you always need caution with these, ie: book profits to cover/reduce your capital risk. For me, these stocks have taught me a lot, and I mean much more than mere $$s.


one can see clearly, here, just how & why investors with advanced strategies are often able to beat the humdrum index.

2 takeaways, for me, from this important paragraph are 1) an investor in the bio-pharma sector must have interest & a basic understanding in medical research, & 2) as in all risky stock positions, book partial profits whenever possible in order to protect capital.

parties who turn up their noses at these volatile & risky stocks are hopelessly misguided imho. A by-product of these stocks is that they are in the forefront of the news, so their stories are nearly always passionate & gripping.

for instance, the world is hovering right now on the brink of many important cancer breakthroughs. Some of these companies are going to be the olympic banner-carriers in the race. What's not to like about following their progress. And to be able to benefit by a few $$ by reading the news that one should be reading in the first place is, as the poet said, very heaven.


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## LionMG (Dec 21, 2012)

CLSN takes a huge hit on underwhelming Phase III results. 

http://seekingalpha.com/article/1149231-celsion-s-bad-beat-4-tells-that-longs-missed

I probably should say thank you! Thanks!

It's a shame though, was hoping for positive results for the sake of science. I feel bad for a lot of the longs too - probably a lot of gullible people like myself who rushed into it.


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## LionMG (Dec 21, 2012)

Looking back from the start of the thread, it's interesting to see how things transpired. I started with just a question about accounts. If humble_pie hadn't known I was looking at ABX before, he wouldn't have asked about it in this thread. That led me to say what stock I was looking at - CLSN. Which set off the alarms of HP and Toronto.Gal. Which led me to second guess and dig deeper, instead of putting my faith in a bunch of articles and rush into things. 

I would've lost money at the very start of my investment career, and probably would've been soured by the whole thing and turned to index funds for the rest of my life. 

But now... perhaps... the next Warren Buffet? :chuncky:

I like this quote best from the comments in the recent CLSN disaster articles: "As one who took a big loss on this, guess it goes back to "Never invest in what you don't understand", or can't explain in a sentence."

I made that mistake by investing in INO and ABX. I'm going to hold them long and my gut tells me I'll do well, but I'm not investing another cent until I do a ton more research.


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## Toronto.gal (Jan 8, 2010)

LionMG said:


> 1. CLSN takes a huge hit on underwhelming Phase III results. I probably should say thank you! Thanks!
> 2. It's a shame though, was hoping for positive results for the sake of science.
> 3. but I'm not investing another cent until I do a ton more research.


*1.* That was exactly what I/HP were talking about, that most fail! No need to thank me; had it gone the other way, like KERX did, you would have come looking for me :biggrin: [but remember they failed at first also].

As well, what I was trying to emphasize, was also the fact that had you bought at $7+ as you had wanted to do, and where the stock was since you opened this thread, and after a huge increase since the year low of $1.41 btw, you would have been down a lot today, as even if you had invested $700 for just 100 shares, your *$700* in just a blink of an eye, would have dropped to $134 [as of this morning]. However, had you bought at say $2 just a few months ago, your *$200 *investment would have dropped to $134. Much easier to recover $66 than $566! So limit the downside potential by getting in early in the game. Losing small for the sake of science, would not bother me in the least. And I should add, that I also contribute a % of pharma profits to a hospital in T.O.

*2.* I, too, feel disappointed when trials fail, but the research goes on all over the world, so there is hope, though too little too late for many.

*3.* That's just it, you can't expect to be successful without any effort on your part; reading Seeking Alpha is not what I'm talking about.

But I'll say no more because I have been accused by a few around here of pretending to know it all. :rolleyes2:


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## humble_pie (Jun 7, 2009)

LionMG said:


> Looking back from the start of the thread, it's interesting to see how things transpired. I started with just a question about accounts. If humble_pie hadn't known I was looking at ABX before, he wouldn't have asked about it in this thread. That led me to say what stock I was looking at - CLSN. Which set off the alarms of HP and Toronto.Gal. Which led me to second guess and dig deeper, instead of putting my faith in a bunch of articles and rush into things.
> 
> I would've lost money at the very start of my investment career, and probably would've been soured by the whole thing and turned to index funds for the rest of my life ...
> 
> INO and ABX. I'm going to hold them long and my gut tells me I'll do well, but I'm not investing another cent until I do a ton more research.



hey lion toronto.gal really does know just about everything ! i'm serious here, not joking in the least.

you were an excellent student - you'd sent me a pmm about hoping to buy ABX - & that is why we were happy to offer whatever comments we could.

it's not surprising that you've come to understand so quickly that you - & no one else - must do your own research & develop your own expertise. I suspect you are going to do very well in this endeavour.

something that makes the effort a time-saver rather than a time-loser is the fact that most of these stories belong to massive & critical news themes of our times. We are going to read about these mega issues anyhow - medical breakthroughs, geopolitics in the middle east & asia - so why not take an extra couple of steps to figure out how some of these enterprising small companies might be fitting into the overall picture.

wishing you success with everything.


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