Wednesday Wealth Recap:
- The world’s best investors use a wide range of strategies to grow their portfolios. But the core principles behind each of their successes are remarkably similar. Alexander Green shares the five tenets that every investor should take to heart.
- Gas prices are soaring, and all signs point to a full-blown energy crisis. But what does that mean for investors? Nicholas Vardy explains the unintended consequences of the “politically correct” investing movement along with how investors can profit from the coming energy rebound.
- Singles Day – an unofficial Chinese holiday celebrating single people – is fast approaching. Celebrated on November 11 each year, it’s the world’s largest shopping day. And Chief Trends Strategist Matthew Carr has an interesting way to get in on this retail trend.
Note from Senior Managing Editor Christina Grieves: Do you like game shows? Since you’re a subscriber to Liberty Through Wealth, I already know you like investing. And if you’re anything like me and you absolutely love trivia games, today’s the perfect chance to combine those interests!
You see, our friend Marc Lichtenfeld – The Oxford Club’s Chief Income Strategist – is hosting the Club’s first-ever Oxford Investing Games this afternoon at 1 p.m. ET. This completely free event will add some fun, friendly competition to your day… And you’ll have the chance to win some fantastic prizes!
I personally can’t wait to get in on the action, and I hope I’ll see you in Marc’s live chat room later today! Just click here to sign up, and make sure to join the Oxford Investing Games at 1 p.m. ET. Good luck!
One sector of the market has been front of mind for investors lately…
Thanks to new medical innovations and the ongoing COVID-19 pandemic, that sector is, of course, biotech.
In fact, a record number of biotech and healthcare companies went public last year. And that trend has continued in 2021.
I first got involved in the biotech sector way back in 2004. I realized that no other sector had the same potential for enormous gains and sustained growth.
You’ve probably heard the stats by now. Ten thousand baby boomers turn 65 every day in the United States.
And what do we consume more of as we get older? Healthcare. As we advance in our senior years, more people get sick and require more medicines for difficult-to-treat diseases.
So if I could invest in only one sector for the next five or 10 years, it would be biotech, without a doubt.
But how do you choose which biotech stocks to invest in?
As The Oxford Club’s resident biotech expert, I’m often asked what I look for when choosing biotech stocks. Here are five specific things I want to see…
No. 1: Game-changing technology.
I’m not interested in a company that has a cancer drug that adds two months of life over the existing standard of care. I want to see entirely new approaches to treating disease – something we’ve never seen before.
No. 2: Safety.
A drug is unlikely to get approved if it is unsafe, no matter how effective it is. I pay particularly close attention to Phase 2 trial results because they’re usually the first real indication of whether a drug is safe enough to try in a larger population.
No. 3: Upcoming catalysts.
Biotech stocks can move quickly on news. I don’t want to be sitting with a stock for a year and a half waiting for clinical trial results. I typically want to see important trial data within six months.
No. 4: Cash on the books.
Most small cap biotech companies are unprofitable and burn cash. I’d rather not be holding the stock when management sells shares to raise capital. This dilutes existing shareholders and causes the stock to drop. If the company has a lot of cash already, it reduces the chance of seeing a stock offering.
No. 5: Smart money.
I like to see investors who I respect own large holdings in the stock. When I see investors like Felix and Julian Baker or others, I know some major league brainpower has reviewed the company’s science and investment opportunity ahead of me and has decided to move forward. My confidence is also boosted when insiders own a lot of shares.
From there, I’ll dig into the clinical trials, investigate management to see whether there are any red flags and conduct other due diligence.
There are a lot of factors that go into deciding to pull the trigger on a biotech stock, but the above list is a good start.
Remember, no other sector sees stocks move 50% or even more than 100% in a day on a takeover announcement.
Here’s just one example: Five Prime Therapeutics jumped 78% in one day (March 4) on an acquisition announcement – and that was after it jumped 349% in one day in November 2020 after reporting positive data.
I would argue that biotech is the most important sector in the market and will be for the next decade and beyond.
Your portfolio should have some exposure to biotech stocks in order to take advantage of the enormous potential.
P.S. I’m hosting a free special event at 1 p.m. ET today where I’ll be revealing the ticker symbol of a biotech stock that delivered 1,400% growth in net income year over year. Compare that with Amazon’s 84% growth… and you can see how valuable this recommendation is. Just click here to register, and be sure to join me this afternoon.