It seems that at the very least, the market is close to strong-form efficient when dealing with all of your very large-cap stocks, S&P 500 and the like, although this may be tested with the Enron collapse. Diversification really isnt that hard a concept to grasp, and even someone without a finance degree just learning from the net should be able to come a somewhat decent stockpicker, depending on risk-reward allocation. The hard part is, as an individual, not taking on too much risk (as youve done with your biotech position) with a big gamble. You gotta stick to your plan - few people can turn 10,000 into 100,000 or more in months alone. I couldnt say about all analysts, but many do actually understand the industry they cover, albeit usually from a different persepctive - that of the big investment bank. The I-bankers seem to understand the industry even better, occassionally, but of course they cant trade on thier insider knowledge. My advice to anyone starting to invest and trying to be cautious about it - First and foremost, define your goals and how much risk your willing to take on. Its repeated over and over, but many people just dont actually do it. You should have a portion of your income/wealth in money markets or bonds and you need to know how much. On the other extreme can be a small portion that you play around with, really take risks, dollar stocks, option-trading (although theoretically this should just be done to hedge risk and not make money) and the like.
