Like the products they produce, drug stocks can be exhilirating to own. Their growth can be fantastic and short-term gains are often through the roof. Unfortunately, these companies can also be incredibly risky. Investors learned that today when shares of Matrixx Initiatives imploded:
Buying and selling stocks is hard enough as it is. If you give me a company that makes paper (a relatively simple product) it will take me days or weeks to break down their balance sheet and thousands of other variables before I can decide whether it is a decent investment. And even after that the odds of that stock outperforming its industry peers are still pretty low. Give me a company that even doctors have trouble understanding and we’re talking about nothing more than full on gambling. Investors in Matrixx Initiatives found that out the hard way today….