Lessons taken away from the RGDO crash

August 26, 2014

This discussion came about following the crash of RGDO bio stock 25/8/14. Id be v interested if others could summarise the lessons they’ve taken away from this fiasco. I think it would assist all (especially newbies) to re-evaluate their investing style and focus their DD. Let the weeping begin.

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82 Comments on " Lessons taken away from the RGDO crash"

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Alan Harris
Guest
0

Bio is unpredictable…..if you lost more than you could afford to lose with a wry smile, you were an idiot for betting too much in the first place. I’m an idiot and Im not smiling !

bobbill
Member
21

Me too!

DBMD
Irregular
1096
I’m not convinced yet. Still trying to loose more. I certainly would not risk it if you can’t loose it. If there is nefarious dealings, then some of the early price gyrations were indeed fixed by market makers and the elite investors to suck money out of the retail crowd. It was for that reason I did not invest initially till the price had substantially fallen. I have missed stocks like CLDN and NBY becuse I wouldn’t pay more. There are times when I sell too soon taking out profits. Bottom line is at the end of the year can… Read more »
arch1
Irregular
7744

DBMD I certainly understand. In 2009 I bought ARWR for abt.$0.90 rode it up to $2.10 and long slow decline to abt.$1.00 in 2011,got out two months before it shot up to$6.00,,,,hit >$27.00 early this year and now abt$15.00. On another front I bought CRWG,,Crowdgather (same idea as FaceBook but earlier) for $1.00 in 2009 recent price ten cents. Sometimes it is better to miss a bus and catch the second one. There is always another.

Leo
Irregular
152

Ditto! My head is barely above water only because of an over committment to gild. I have way too many bad entries and exits. I have checked out several books on technical analysis but could use some advice on which ones are the best. Regards, and another huge thank you to all the gummies, especially the heavyweights. It is still a barrel of fun.

sandiegojp
Member
491

Hi Leo:

I’m new to this game as well and, in fact, have yet to trade. However, I have the books by Dr. Alex Elder and Mark Douglas to be well worth the read. I will look forward to reading the books other recommend.

jonomalley
Member
87

One Up on Wall Street by Peter Lynch. Keep it simple. I lose when I try to get fancy and greedy and invest in stuff I don’t understand like RGDO (actually haven’t lost yet cuz I commit to riding stuff down to zero if necessary to avoid building habit of trading- I just want to buy for long haul- and who knows- RGDO might make a comeback and be worth $20 in five yrs…either way I can afford the loss just fine. Still have almost 30 yrs to invest).

subprime
Member
7

I wish I had read Douglas’ Trading in the Zone BEFORE I had placed my first trade. Of course, it probably wouldn’t have made as much sense back then. Have you read his earlier book as well?

hipockets
Irregular
1201
DBMD, I too have decided to hold on. I’m looking at it this way — forget about the past. Look at it as a new investment. If it goes, it might go big time in a few years. If it doesn’t, I’m not losing much more. The flaw in my reasoning is that I would not have bought the stock in the first place. :>( By the way – thank you for all of your posts. You are much, much appreciated. Can anyone comment on the pros and cons of enrolling in the class action suit?
arch1
Irregular
7744

Hi Class action suits exist solely to enrich trial lawyers & punish or destroy corporations IMO. What you might get from joining, if combined with $5.00 perhaps would buy a simple coffee at $Starbucks………..

Alan Harris
Guest
0

I.E….. the lawyers are the pro’s AND the cons!

hipockets
Irregular
1201

Thanks, Frank.

JosephC
Member
22
It is not only with Regado, but with biotech there are many unknowns. “As we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know. ” Donald Rumsfeld. In Biotech there are too many unknowns to commit oneself to a big position and to hold all of it long term. Yes, there are instances where I works, but can one survive the period that… Read more »
biotechlong (btl)
Irregular
2790

Great insight, Joseph. I particularly endorse application of the concept of “unknown unknowns” in the clinical stage biotech investment arena. That concept closely parallels the fully “hidden pane” in the “Johari window” mechanism of self-knowledge (vs. seeing ourselves as others see us) popularized by psychologists several years ago.

arch1
Irregular
7744

What about the probability that it is impossible to know of all the unknowns we do not know?

snorkelwt
Irregular
26

We will never know.

Warner
Irregular
117
I started on biotech during the first thread about Benetic. Bought at .77 and sold over 2.00. WOW!!!! How great can it be to be on the inside of investing. What a bad start. Since then I bought the farm on several recommended, yes recommended (may have been indirect, however in effect recommended) biotech companies. QRXPY, CLDN, BTEBY, RGDO, RNN, NBY, AKAO to name a few. I am an old big boy trying to learn a new investment base. While I look at each of these investments, it is somewhat bewildering. I am very decent on DD and can over… Read more »
Alan Harris
Guest
0
Warner: The whole purpose of this thread is to allow others to sound off so others can learn from your takeaway…..in that sense we should be grateful to you for your contribution. (Here comes the but) But what you seemed to have learned is that even though you are ‘guided’ (at practically zippo cost) by a specialist in bio research…a doctor….a phd. SHIT HAPPENS. The question is, could you have got it righter without KSS, Fred, June and Alice? Try tossing a coin in the air….get the worlds leading mathematicians to predict how it will fall. Ill bet, with some… Read more »
arch1
Irregular
7744

Alan well said & remarkably close,,Odds probably >49%/49% with <2% variability/uncertainty. Some Highly Improbable Things happens… as in your acronym.

Alan Harris
Guest
0

Just had to make it 400 🙂

biotechlong (btl)
Irregular
2790
For Alan: Thank you, Alan for setting up this thread – which I hope will serve as a vehicle for all of us to record and extract lessons learned (to carry forward) from the unexpected developments with Regado. For Warner (re Post 4 above): The exceptional series of Gumshoe biotech threads is built on a strong foundation consisting primarily of Dr. KSS’ selfless giving of his time, talent, professional knowledge, and 20+ years of biotech investing experience – augmented by great contributions from givers such as Glenn, Alan, Frank, Walter, eyedoc, DBMD, Kenny, capn Dave, and David – and many… Read more »
Alan Harris
Guest
0

Ill happily settle for a G&T……I wonder how many beat to that cliche 🙂
Thanx for the thanks. AH

KennyG
Irregular
3527

Well said Lawrence. Midway through I thought I was reading something from Dr. KSS in its eloquence.

andy451
Member
216
Reality has more wrinkles in it than the most inspired intelligence, imagination, insight can ever ferret out of it. Even a dazzling intelligence is profoundly limited. It’s like what Nietzsche says in that manifesto of his The Birth of Tragedy. Euripedes isn’t as good a dramatist as Sophocles because he was too strongly influenced by Socrates, that incurable optimist. He had too much faith in human reason. This can’t always save you. It might be a nice flashlight to have in the general darkness, but still, the tepid light only goes so far. There is more of reality outside the… Read more »
arch1
Irregular
7744

I have never actually tasted a genuine absinthe but i do like a G&T over minus 12 degree Celsius cubes with a twist of lemon and without the tonic.
Did you know that Hitler got his notion of a Nordic master race from Nietzsche,,,,,,
Man & Superman ?

andante
Member
15
I have a few ideas from this experience. First is to avoid companies with only one main product in the pipeline,or make the investment very very small. Second,dont bother investing in companies pursuing small gains in safety or efficacy . Dr K explained why Regardo needed to run such a large trial,but I didnt fully appreciate the implications. QRX was another pursuing small gains,in my view,this is all risk with little potential gain. Third,in the investment arena,enthusiasm is dangerous,and clouds reasoning.As part of that,any talk of management being special,passionate,great guys,based on talking to them,I view as a red flag.CHARISMA IS… Read more »
Alan Harris
Guest
0
I was just thinking about GILD while you guys were snoring. It was trading around $104/5 just before the approval announcement, whence it ‘lept’ to $107. So had you sold before the announcement youd have missed out on a $2 gain….ie. if you were quick, coz it fell to $105 again after profit takers sold up! So tell me, which would you prefer: a cert $105 in the bank inc some profit, even though you passed up on an extra $2 gain….or exposure to a 50+% loss? So my bio shocks take away is, ‘sell’ before the announcement if you… Read more »
arch1
Irregular
7744

I am learning to take the money and run. ” Pigs get fat & hogs get slaughtered” has some validity.

dunnydame
Irregular
802

Ahhh, Regado.
As a conservative & not-well-heeled investor, I have but 225 shares – BUT – bought the first 160 share “tranche” (I love that word) at $6.35 in April and then bought a tranchette of 65 at $2.93 after the July dive (Scottrade owed me a couple of free trades). Now I’m at the point of thinking that the price is too low to be worth selling – or should I be selling?

Alan Harris
Guest
0

We’d be fascinated to know….please keep us updated.

dunnydame
Irregular
802

Alan: I finally put in a sell order on RGDO with Scottrade (limit, good until cancelled).
Cheers, Penny

Alan Harris
Guest
0

Its jumped 15+%….there must still be some lunatics out there. Well sold Penny.

dunnydame
Irregular
802

Well, actually my sell order didn’t go through until Oct. 14th – $1.10. My first thought was “some fool bought my shares!”
Penny

arch1
Irregular
7744

Penelope I still have 200 shares that I had trapped by a covered call,,,at this point I think I may as well hold & hope for some recovery.

dunnydame
Irregular
802

Still holding, Frank?
Penny

arch1
Irregular
7744

I am. I think the company feels there may be a workaround for allergy reactions,,if they find one stock will recover +,,,,,if not there may still be some unseen value to prevent further loss. Right now it looks to me as at least if not more likely than Beni getting act together.

xcernfsi
Member
23
One of the takeaways for me from a bad experience with a small pharma stock some time back (CLPA – they tried to be cute with the FDA on getting orphan drug fast-track approval while hinting to investors that off-label use would make all rich) is that I’d risk at most 2% of my portfolio on any one investment. I might invest as much as 10% of my portfolio in a stock with steady earnings and be prepared to be stopped out on that investment on a 20% decline in that stock’s share price. But any investment in a drug… Read more »
Travis Johnson, Stock Gumshoe
Admin
8429

Well put!

Dominique
Guest
0

Hello.

I would like to find out which company Dr. Eifrid is teasing about .
It is a smart phone royalty company which makes tiny modems for all smartphone companies.
Thank you.

jussmokey
Member
4

I am wondering about the machine that uses the toungue to access the nerves in the brain to help MS Parkinsons’ etc that Montel Williams and Nick Hodge are talking about.
Seems it is a company out of Madison Wisconsin, Any one know anything about this?
Thanks

jonomalley
Member
87
I’ve been following this conversation in hopes of getting some feedback on future prospects for RGDO. I held all my shares even after the collapse because I missed the announcement and ensuing crash in price, also because I’m trying to develop a habit of buying and holding. Two questions for any more experienced gumshoe-ers out there: 1. I assume now that trying to do “buy and hold” in the bio-pharm world is not a good idea (I work and can’t stare at price movements all day and/or get on all the important calls)? 2. Is there any future hope for… Read more »
KennyG
Irregular
3527
Jon – with the halt in RGDO’s primary drug, it is pretty much not working on anything that will come to any trials in the near term..nor intermediate term. One school of thought is to hold the stock and pray that something happens to recover your loss. Or, take the loss and use the proceeds on something else that has a better chance of appreciating from this point forward, such as CTIX, FOLD, ACHN. That is what I personally would do (as matter of , it’s what I did do). Other gummies may have their own personal favorite stocks to… Read more »
Alan Harris
Guest
0

I wish I could give Kenny’s advice 10 ticks.

Alan Harris
Guest
0

I know you dont have the time to nurse your picks. But unless you learn to swallow, you will end up with a bottom draw full of un- loved losers and no capital to play with.

Alan Harris
Guest
0

Also remember that when a stock goes down 50%…..it has to rise 100% t get you just evens. When was the last time you saw a crashed stock gain 100%?

arch1
Irregular
7744

likewise,,,,,,,,,,,of course it is possible they will do an inversion with an OZ corp. and have Hot Crapper fall in love with them?

Ogle
Irregular
66
I’ll throw my hat in the ring with Kenny. His advice is solid. I think of a RGDO position this way….If you were not in the stock would you buy it now? If the answer is no, then I would sell it and look for a better candidate to recover my losses using my recovered capital. I ask that question of every position in my portfolio that has a pullback. Like all of us, I have learned some valuable and actionable experiences here on SG and by reading Dr. KSS especially in evaluating the medical science in these biostocks. Some… Read more »
Alan Harris
Guest
0

Walter ”It may be that these small companies in development stage trials are best bought after they are successful in meeting trials and are approved. You don’t make the 10 bagger wins but you don’t have 10 bagger losses either, and GILD has shown me that you can make good money after the drug has been approved.”
Spot on with my present thinking!. I just wonder if theres a way to judge this possibility?. Can anyone suggest some past successes/tickers so that the post approval performance can be reviewed?

biotechlong (btl)
Irregular
2790

Pure gold, Walter! Thanks for sharing your solid investment strategy.

hipockets
Irregular
1201

Than you for sharing, Walter.

Ogle
Irregular
66

Sold 1/2 position of GILD. I’ll look at adding back if it holds at 100 or slightly above. If it does not hold at the century mark, the other half goes. It is possible that GILD may find some short term support at its 20 day exp. moving avg. but stocks that break 100 tend to come back and test that price. If 100 does not hold up, the next support is down at the 90-91 level and I do not want to ride it down to there.

Best to all
Walter

jonomalley
Member
87
Thanks very much Kenny, Alan, Walter for your feedback. Makes my Irregular fee worth it just to be able to get solid feedback from people who have learned a lot more than this rookie investor! It hurts me to have to take a loss but I do agree that this industry is unique from most other companies in that they sometimes have their entire success hinging on one product. Unfortunately it’s left a bad taste in my mouth for how complex this business is and how I know nothing about it- a recipe for losing more money. I don’t like… Read more »
Alan Harris
Guest
0

i hope you do better with motley fool @ $1000… GL

jonomalley
Member
87

Hi Alan, not sure what you meant but just to clarify I’m certainly not leaving Stock Gumshoe, just the bio sciences stuff. I’ve made some really good gains investing in some of Travis’ ideas that I understand better.

Alan Harris
Guest
0

I can now see that I left it open to ‘interpretation’. i truly meant good luck. I think you made your point MOST coherently. Bio is a white knuckle ride. There are less stressful ways to lose money 🙂
I may join you.

Ogle
Irregular
66