Fear of missing out — also known as “FOMO” — is a common yet dangerous emotion in the world of investing. It’s completely understandable why an investor would want to hop onto a stock that has been skyrocketing, even if they’re risking losses from a sharp reversal if that purchase is of an overvalued equity near its peak. On the other side of the coin, few people fear the prospect of avoiding a massive loss, but they still might hesitate to “buy the dip” on a stock if they suspect that the company’s future could be other than bright.
In this vein, shares of antibody developer Zymeworks (NYSE: ZYME) might seem like a questionable purchase. Over the last two years, the stock has careened wildly with every report of progress or failure in its clinical trials, and its late-stage pipeline is starting to look a bit sparse. Should investors take the plunge and bank on its upcoming clinical trial results to drive the stock back up?