Tuesday, March 22, 2011
Readers Respond: Generex, Real or Scam?
"Readers Respond" is a forum where VFC interacts with the readers of VFC's Stock House. Readers can leave comments on posted material at either of the blog sites, through Seeking Alpha or via email, firstname.lastname@example.org. All stock opinions, tips and questions are welcomed, whether agreeable with VFC's opinions or not. Thanks for the comments, because without interaction - this wouldn't be fun.
A comment posted to VFC's NEW Stock House regarding Generex:
In looking at the internet blogs on Generex Biotechnology there seems to be a lot of polarization; scam or diabetes paradigm changer. How can the average person sort truth from fiction absent news releases? I certainly would like to participate if it is real but obviously not if it is empty. Which appears to be more likely? And WHY??? Confused
VFC's Take: I'll start off by saying that the biotech sector is full of volatility and action - and if you've got no stomach or tolerance for risk, then this sector is not for you.
It's also a sector full of potential life-saving and life-altering drugs and treatments, so it's a sector to be taken seriously and not written off as a complete scam of a sector, as TheStreet.com's biotech blog does.
However, since many of the shares of start-up biotech companies trade on the bulletin boards and the pinks, the sector is susceptible to scams; and some scams even make it to the big boards, although by trading on the big boards, your putting yourself more into the hands of being held accountable by the SEC.
Scams can live forever on the pinks.
The closest you're going to get to the truth from a company is the SEC filings. Misleading investors will attract a few lawsuits, but the heat from the SEC for a company is not a welcome event. Not that a class action suit from investors is either, but the SEC can shut you down quick, fast and in a hurry.
So be keen on what the company is telling the SEC in terms of filings.
Press releases are a good source of getting the information that the company wants you to know, but they can be phrased in ways that are vague, so it's up to you to set your BS factor where you want it, and to decide how relevant a PR really is to the overall picture.
You'll get fifty PRs a day from SiriusXM, but how relevant is each PR to the potential of the share price?
As for Generex, and every other stock, it's up to each individual investor to decide what's what and who's who according their own DD.
Don't use a blog, whether it's a personal blog or a blog imbedded on a larger site, to make investor decisions, and most certainly don't rely on message board information.
Read THIS POST of mine for my opinions on where to start DD.
Disclosure: Long GNBT.