Investing in Biotechnology Companies
The “Stock Market” is a term that actually describes several markets such as the New York Stock Exchange NASDAQ, where the stocks of companies are traded. Shares in a company are sold and the shareholders then become part owners of the company. Offering shares of stock raises money for continued research and development of company products or services.
When investing in a company, the goal is to buy shares at a low price and then sell them at a higher price. Individual stocks may go up or down independent of how “The Market” is doing overall. Stock market indices such as the Dow Jones Average, the NASDAQ, and the Standard and Poors 500 report how “The Market” is doing “on average.” To check the progress of individual stocks, one can look up their price per share on one of the published indices. These are available in the business section of newspapers and on the Internet.
How does one know which stocks to buy? No one ever knows for sure since no one knows what will happen to the economy, the market, or a company. Purchasing stocks is always a gamble but the more you know about a company’s finances and its products, the better you can decide whether a company’s stock has the potential to increase in value. For example, if a new drug is just completing Clinical III Trials, and is about to go on the market, the company may expect to start making money on that product. Using annual reports and researching companies, for example, on the Internet is a good place to start.
To “purchase and track” biotechnology stocks with the goal of buying low and selling high and ending up with the highest value investment portfolio after 14 weeks.
Start of project
1. Each investor begins with $1000.
2. Choose two biotechnology companies to invest in. Plan to buy enough shares of each stock to spend a total of between $900 and $1000. You will hold onto these stocks for two months.
Each investor must have a rationale for each company selected. Each paragraph must include a list your reasons for selecting the stocks you have chosen and the amount of money you want to invest in each. Discuss the past performance, future potential, present or future marketed products, management or management changes.
3. Make an individual data table for each stock purchased to use as an investment record. Use Google Spreadsheet to create each data table.
Each data table should include:
a. A title with the company’s name, the company’s trading symbol (i.e. ABI for Applied Biosystems), the number of shares purchased, the length of the study, and the date of your stock purchase. b. Columns to record the price per share and the total value of the shares of stock purchased every week for 14 weeks.
|5 shares of Genentech (DNA) were purchased on 9-10-07 for a total of $477.50 for 14 weeks | |Week |Price Per Share |Total Value |Comments | |1 |95.50 |477.50 | | |2 | | | | |3 | | | |
After 7 weeks
4. After 7 weeks, you may want to modify your stock portfolio. You have three investment options: a. You may leave your investments as is.
b. You may redistribute all your investments to new stocks from different companies (and start new data collection). c. You may sell part of your shares of stock and take the profit or...
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