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Chemist’s Found the Formula for Investing
Massachusetts Scientist Practices ‘Invest in What You Know’ Theory
Forty-two-year-old BetterInvesting member Lin Xu, of Lexington, Mass., began investing at the age of 37, when the company he worked for offered its employees stock options and restricted stock. “I did not know how to handle them,” he recalls. “When I should sell and when I should keep? It appeared to me that investment cannot be avoided in life, so I started to pay attention to it.”
Originally from China, Lin completed his Ph.D. in chemistry in Canada, then joined Merck & Co. as a research scientist in 2004. “Since then, I’ve been building my career in the pharmaceutical area. My wife, Ping Zhou, and I have two sons, Allen and Brendan. We enjoy our life in New England and go camping near the beach or White Mountain every summer.”
Lin first learned about BetterInvesting from one of legendary investor Peter Lynch’s books. He attended BetterInvesting’s National Convention for the first time in 2012 and was impressed by how many members were willing to share their knowledge and investment experience. “I am involved in BI’s Massachusetts Chapter,” he says, “and I hope one day BINC will be held in New England with a focus on investing in biotech/pharmaceuticals. Since most of my friends and co-workers here in the Boston area are in the same field, we often discuss the investment potential and risk in biotech.”
Lin currently invests in individual stocks in both IRA and nonretirement accounts and gets many ideas nearby. “Since I work in biotech and many biotech companies are located in Boston, I get initial ideas and research from local meetings and news,” he says. “When I notice a biotech company starting to hire employees or expand sales representatives, I start to research the company to understand its current progress. This helps me find good companies to invest in.”
Lin also looks online for more information; his two favorite websites for researching biotech stocks are EvaluatePharma and Seeking Alpha. “The first is the corporate site for evaluating pharmaceutical companies. The second has comments from other investors and also transcripts of corporate financial meetings, which are valuable for understanding a company’s business strategy.”
Lynch is one of Lin’s favorite investors. “I like to follow his investment philosophy,” Lin says. “He focuses on the long term, looking for fundamentals and finding companies with a niche.” Lin even emulates Lynch’s “invest in what you know” recommendation by doing retail research at the Burlington (Mass.) Mall, Lynch’s past research haunt and conveniently located only two miles away from the Xu family home.
Angele McQuade is the author of two books, including Investment Clubs for Dummies. You can find her online at angelemcquade.com.