- You don’t have to be intimidated by biotech investing – you just need to choose the investment strategy that’s right for you.
- Today, Nicholas Vardy explains two key strategies that can make a fortune in the healthcare sector.
Editor’s Note: Today, Nicholas discusses the major gains you can achieve by investing in biotech. If you’re interested in learning about the very best opportunities in the healthcare sector, be sure to tune in to The 2019 American Health & Wealth Summit on Thursday, July 18, at 1 p.m. ET. Click here to register for this FREE online event and learn how you can profit from today’s best medical innovations.
– Christina Grieves, Senior Managing Editor
Biotech has always been one of my favorites sectors in which to invest.
The reason is simple: I don’t know of any other sector that offers such a unique combination of profitable short-term trading opportunities… and the prospect of life-changing wealth creation.
On the one hand, if you get your timing right, you can make triple-digit returns in a matter of months.
On the other, some of the biggest fortunes in the stock market have been made by investing early in biotech giants like Celgene Corporation (Nasdaq: CELG).
Since Celgene’s initial public offering in August 1996, its stock price has soared from a split-adjusted $0.34 to well over $90.
In short, the biotech sector is bursting with opportunity.
The “Boom and Bust” World of Biotech
I am a big-picture investor who looks for long-term sustainable trends. That’s why I focus on identifying boom-and-bust cycles.
If I get my timing right, I can make money on the way up… and on the way down. And the volatile biotech sector is all about just such booms and busts.
Let’s look at a recent example…
Biotech soared between 2011 and June 2015. Major indexes almost quadrupled over this period.
Then over the next year, the biotech sector collapsed, falling by almost 25%. And it has lagged the S&P 500 ever since.
Now let’s look at how you could have used biotech ETFs to crush this boom-and-bust cycle.
During the boom, you could have simply invested in the largest biotech ETF: iShares Nasdaq Biotechnology ETF (Nasdaq: IBB). This ETF tracks a market cap-weighted index of Nasdaq-listed biotech companies.
This investment would have allowed you to almost quadruple your money.
Even more impressive was an opportunity to place a leveraged bet on biotech through the ProShares Ultra Biotechnology ETF (Nasdaq: BIB). This ETF tracks a double-leveraged version of the same Nasdaq index.
Just compare the performance of these two biotech ETFs with the S&P 500 between January 2011 and June 2015.
Yes, an investment in the iShares Biotechnology ETF crushed the S&P 500.
But investing in the ProShares Biotechnology ETF would have made you more than 11 times your initial investment.
There were no inverse biotech ETFs back then.
But if the biotech sector were to collapse as it did in the second half of 2015…
Today you could invest in the Direxion Daily S&P Biotech Bear 3x Shares (NYSE: LABD) – a leveraged inverse ETF that soars as the market falls.
How to Be a Biotech Sharpshooter
Of course, there’s more than one way to skin the biotech investment cat.
Instead of making a big-picture bet through ETFs, you can be a sharpshooter and focus on identifying the next Celgene.
Here’s the challenge… Most biotech companies are long on promises – and short on results. So identifying the handful of biotech stocks that will make it takes a special kind of expertise.
Still, if you buy into the next big biotech winner, you can make a mint.
If you prefer this sharpshooter approach…
There’s no one I can recommend more highly than The Oxford Club’s own Chief Income Strategist and biotech investment expert Marc Lichtenfeld.
Marc is teaming up with my former publishing colleague and former Speaker of the House Newt Gingrich for The 2019 American Health & Wealth Summit.
Newt will provide an insider’s view into U.S. healthcare policy and the new breakthroughs taking place in the industry. (From my previous interactions with Newt, I know he is a man of strong opinions. Expect him to call it as he sees it!)
Marc will bring his biotech expertise and enviable talent for picking winning companies in the biotech and healthcare spaces.
Marc has promised that he and Newt plan to reveal “potentially the single most important scientific breakthrough of the 21st century.” (I’m very curious as to what this could be!)
So join Marc and Newt for The 2019 American Health & Wealth Summit on Thursday, July 18, at 1 p.m. ET to hear the conversation firsthand.
P.S. Today I’m celebrating the first birthday of my baby daughter, Vera. Much like her mother, Vera was born with a smile that never leaves her face.