Anavex Life Sciences Drops

Why are people investing in this dog?

Anavex Life Sciences Drops
Photo by National Cancer Institute / Unsplash

A few of the news sources I follow for investing and trading started spitting out the Q4 earnings results for Anavex Life Science (AVXL). It's a biotech company that reported a $10.1 million loss. It would appear that a lot of traders were long, hoping for a breakout. It failed and sold off and it sounds like a lot of people lost their shirts yesterday.

I have no idea what Anavex does or researches, I don't need to. I just need to look at the charts and realize that it's a dog.

It IPO'd sometime in 2007, so it's been around for a long time. It had its heyday and peak price sometime in early 2021 and since then has been on a decline, sometimes violently.

Anavex Life Sciences (AVXL) Long Term Chart, (c)

I'm sure there are a lot of people trapped here, much like GME traders, and looking at the last 6 months, it appears that the $7 price level was key here. A lot of people were looking for a breakout.

Anavex Life Sciences (AVXL) Chart, (c)

That breakout didn't happen, and why would it? All the technical information tells me it's still a long-term downward trend. Maybe $5 a share is the low point but I wouldn't even consider buying this company, selling short maybe.

AVXL is part of the Russell 2000, the small-cap index famous for all kinds of risk, volatility, and lunacy. I do own a lot of Russell 2000 and small-cap indexes for my portfolio and generally like them. They help turbocharge my returns in good years and sting hard me hard in bad years. C'est La Vie.

A smarter person would skip AVXL and just invest in a low-cost Russel 2000 index fund. Why? because it outperformed AVXL.

AVXL and RUT rebased relative performance, (c)

Sure it outperformed the Russell 2000 from 2007 to late 2011, but after that, it sucked bad. The moral of the story and why I don't day or swing trade anymore is because of results like this. In a nutshell, it's better to buy low-cost index mutual funds across diverse assets and dollar cost averages. That's how you build long-term wealth and that's how I do it.

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