Ohr Pharmaceutical (OHRP) is a beautiful example of how to speculate in biotechnology stocks. In the past year it has given at least three different buy signals and each one would have yielded a respectable profit within a few months time. More importantly had you invested in OHRP your principal would have been fairly safe from volatility meaning you could sleep easier at night.
OHRP suffered a huge one-day drop of 60% earlier this year in March when one of its tests delivered disappointing results. There are plenty of websites touting the fantastic upside of investing in biotech stocks prior to their Phase III results. But more often than not the money is made if you happen to be short the stock. Most Phase III results are negative and only the short-sellers make any money.
Rather than shy away from volatile small cap biotech stocks you should use this history to make an intelligent speculation. OHRP's drop fit perfectly into one of my favorite rules of thumb when it comes to speculating, "Wait one week after a giant one-day drop then buy." If you had done this with OHRP back in April of 2015 you would have more than doubled your money by now.
Why this works is more of a study in human behavior than fundamental or technical analysis. It is probably more a function of the biotech company convincing investors what it learned from the Phase III test failure and getting them to put up more money for another test, another successful test. Plus, all the weak holders of the shares were flushed out when the price collapsed so any remaining investors are in it for the long run.
In many ways OHRP is an overlooked biotech stock. It is not looking for a cure to cancer or diabetes (both huge markets) but rather macular degeneration. As the population ages, then this will become a bigger and bigger market., But for now it is just a niche player.
What is the next OHRP? Check out THLD. It took a big drop a few weeks ago and you can pick it up at a great price.
OHRP suffered a huge one-day drop of 60% earlier this year in March when one of its tests delivered disappointing results. There are plenty of websites touting the fantastic upside of investing in biotech stocks prior to their Phase III results. But more often than not the money is made if you happen to be short the stock. Most Phase III results are negative and only the short-sellers make any money.
Rather than shy away from volatile small cap biotech stocks you should use this history to make an intelligent speculation. OHRP's drop fit perfectly into one of my favorite rules of thumb when it comes to speculating, "Wait one week after a giant one-day drop then buy." If you had done this with OHRP back in April of 2015 you would have more than doubled your money by now.
Why this works is more of a study in human behavior than fundamental or technical analysis. It is probably more a function of the biotech company convincing investors what it learned from the Phase III test failure and getting them to put up more money for another test, another successful test. Plus, all the weak holders of the shares were flushed out when the price collapsed so any remaining investors are in it for the long run.
In many ways OHRP is an overlooked biotech stock. It is not looking for a cure to cancer or diabetes (both huge markets) but rather macular degeneration. As the population ages, then this will become a bigger and bigger market., But for now it is just a niche player.
What is the next OHRP? Check out THLD. It took a big drop a few weeks ago and you can pick it up at a great price.