Today, I want to talk about plague investments. Bear with me — I have a red-hot opportunity for you.
We’ll start with Bram Stoker, the author of the famous “Dracula.” That book is based on the medieval Transylvanian tyrant, right? The guy who impaled literally thousands of people, as well as committing other atrocities.
Except, Stoker plays with history a bit in his book. The fictional Dracula impales exactly zero people on stakes in Stoker’s book. In fact, HE gets staked! Hardly goes with the historical theme, does it?
On the other hand, there are bloody corpses aplenty in that book. Death arrives on a ship coming over the water, people are buried alive … where does all that come from?
It turns out these parts of the tale come from Bram’s mother, Charlotte Thornley. As a young child, she survived a plague in her native Sligo, Ireland. A ship arrived bearing death. In the book, that death was Dracula himself, but in Sligo, it was cholera.
The disease spread quickly in Sligo. Bodies piled up in the streets. People were stricken, seemingly died and were buried only to wake up underground and claw their way back to the surface.
The plague was so bad, people from surrounding towns ripped up the roads leading to Sligo and refused to let anyone there out until the epidemic had run its course. Eventually, herd immunity kicked in. The whole ordeal left quite an impression on Charlotte, who filled her young son’s head with stories about it. And those stories turned into “Dracula.”
Or so historians believe, anyway.
Why do I mention this? Because we are living through what will be a historically important plague right now.
Plenty of people want to put the pandemic in the rearview mirror. I don’t blame them, but the virus isn’t cooperating. Heck, in the U.S. anyway, it’s getting worse!
As of Thursday, daily coronavirus cases were rising in 29 states, an NPR analysis shows. Here’s a chart showing the latest trend.
Some countries are faring better than we are. The U.S. is now reporting new cases at nine times the rate of Europe, per million people. But it’s a global pandemic, with global opportunities.
What opportunities am I talking about? As awful as this is, it’s a great time to invest in the right stocks and funds.
Now, you might think the market looks awfully toppy. I agree! I know, in my bones, that the market is overvalued. Heck, big-name investors — from Kevin Smith to Wolf Richter to Jeremy Grantham to Warren Buffet himself — have all trotted out to say the market is in bubble territory. They’re pretty smart guys.
However, I’ve also pounded the table about how the Federal Reserve, and central banks around the world, are pumping money into this market. All that “free money” sloshes around and looks for a place to go.
One likely place for that money to flow is into the drug companies that could roll out a vaccine or other treatment before the November elections.
Now, hold on! You might think it takes YEARS to research a new drug. Usually, yes. But in a pandemic, rules are made to be broken.
Here are three reasons why we could see a vaccine BEFORE the elections in November.
- The federal government is directly funding many of the vaccine-development programs. This raises the odds of speedy approval.
- President Trump is feeling pressure in the polls. It would surprise no one if he pushes behind the scenes to get a vaccine approved super-fast.
- Initially, any vaccine or other treatment would probably be approved for “emergency” use. This also lowers the bar for approval.
So, I think the odds of seeing new drugs approved to battle COVID-19 before November are a lot better than most people think.
One way to play this situation would be with the SPDR S&P Biotech ETF (NYSE: XBI, Rated C-). This fund targets small biotechs — the kind of companies that might come up with a vaccine or treatment for COVID-19.
What do you think the stock market would do if a vaccine for coronavirus was announced? I think that would be blast-off time.
And let’s say the Fed is able to keep the market pumped full of free money, so it gets MORE expensive. Well, hard-charging biotechs should lead the way then, too.
The smart money on Wall Street knows this. That’s probably why XBI keeps hitting new highs.
Looking at the chart, you can see XBI traded sideways since May, then recently broke out to the upside. Volume is bullish. And the Force Index, my favorite momentum indicator, is also strongly bullish.
A breakout like this gives us a target of $142. And XBI could go up from there.
I expect these biotech stocks will go higher even if the market pulls back. And if the market continues to float up on free money, we’ll see biotechs skyrocket.
You can do the research and dig down into individual stocks held by the fund. Just be aware these small biotechs are a gamble. They can blast off … or just as likely crash and burn.
Really, a fund like XBI is the better way for the average investor to play it. You can still enjoy the ride, while lowering your risk.
All the best,
P.S. — Picking industries set to soar on the pandemic isn’t the only way to earn income in this volatile market. In fact, Weiss Research has spared no expense in developing a strategy that could earn you up to $1,000 per week — even if the market falls.