June 20, 6:00 pm EST
Stocks continue to prove resilient in the face of trade war noise. After a global stock sell-off that started last night on news that the tit for tat tariff threats were escalating, small caps actually printed another new record high today and finished up on the day.
Bottom line: Dips continue to be bought.
In the category of “stocks that can soar even on tumultuous market days?”
We had these three charts today …
The first two stocks are biotech. If you have much experience in investing, you’ll know that biotech stocks can cut both ways (most of the time, painfully).
Here’s my pro tip: ONLY BUY BIOTECH STOCKS WHEN A BILLIONAIRE INVESTOR IS INVOLVED!
Who was involved in the two above?
Not surprisingly, the best biotech investor in the world, billionaire Joe Edelman of Perceptive Advisors, is the biggest shareholder in SLDB.
He was also the biggest investor in Sarepta until it quintupled back in 2016 on an FDA approval. Sarepta was up as much as 50% today on early trial results of gene therapy treatment of the devastating Duchenne Muscular Dystrophy (DMD) disease in boys. SLDB is similarly working on gene therapy for DMD.
What about SandRidge (the energy stock)? SandRidge was up nicely today, in a broadly down market, because billionaire activist Carl Icahn successfully de-seated a corrupt board of directors at the post-bankruptcy energy company. That board and leadership that drove the company into bankruptcy, yet has been handsomely compensated in the process, has finally been shown the door. Great news for shareholders.
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November 3, 2016, 4:00pm EST
As we head into the election, there’s one sector in the stock market that looks especially interesting.
Healthcare stocks have been beaten up over the past two years. It’s the worst performing sector on the year. Biotech is down around 20% over the past two years. And it’s driven by fear of price regulations and threats from the Democratic presidential race and nominee. Clinton cracked biotech stocks about a year ago when she tweeted that she would take on price gouging in the industry. But that was after Bernie Sanders presented a bill to curb prices. The perception for the industry is that Clinton would try to curb “excessive” profits at the pharma and biotech companies.
With that, you can see in the chart above, the damage that has been done to pharma and biotech stocks – and healthcare in general.
That said, it’s probably time to buy. It looks like a classic “sell the rumor, buy the fact.” As we know, regardless of who wins the White House, the promises and threats on the campaign trail rarely become policy. And Clinton is known to be friendly to the industry (collecting money for industry speeches in the past). A Trump win would almost certainly send this sector on a tear higher.
Warren Buffett wrote a famous op-ed piece in the New York Times in October 2008 in which he that said the following:
“A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.”
This is the mindset of a great investor and how great investors react when there are opportunities like we’re seeing in this beaten down sector. They buy when others are selling.
The point of Buffet’s piece is that you don’t get rich buying into a high market or selling into a falling market. You can get rich though, buying into market corrections and beaten-down markets. When everyone was running from bank stocks in 2008-2009, Buffett was buying. When everyone was running out of energy stocks earlier this year, Buffett was buying. I suspect the same is happening with healthcare stocks as we head into the election, and will continue in the aftermath.
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