Finding Investment Opportunity in the Zika Virus Outbreak

As the Executive Editor at Money Map Press, I work in a "news-rich" environment, constantly bombarded with newsletters, news summaries, and other alerts in all formats.

Don't get me wrong – I seek these sources out because they're extremely helpful to me in uncovering profit trends, and, by exclusion, finding investment opportunities and angles no one else is looking at.

That's exactly what happened at 2:00 p.m. on Monday, when a New York Times alert popped in the lower right-hand corner of my computer screen…

"Breaking News: The Zika virus is a global emergency, the WHO said, citing possible links to infant brain damage."

This news brings a critical consideration for investors…

What You Don't Know About the News Can Hurt You

zika virusThere have been many, many stories where enterprising journalists have reported on a specific news event from a "here's how to play it/here's the beneficiary" angle.

During my 22 years as a reporter, I saw plenty of them. And I've seen investors get burned plenty, too.

I call it the "Hot Stock Trap."

You see, back in summer 2014, after stories of an Ebola outbreak in Africa hit the newswires, CNN found its beneficiary angle – and reported that two Americans infected with Ebola in Liberia were being treated with a drug developed by Mapp Biopharmaceutical Inc., a privately held biotech based in San Diego.

The press quickly identified another "Ebola beneficiary" – Tekmira Pharmaceuticals, which is now trading as Arbutus Biopharma Corp. (Nasdaq: ABUS), a Canadian biotech that's working on an Ebola treatment.

Tekmira's shares soared 30% that week, and then rocketed as much as 27% the following Monday after the media reports ignited speculation that the outbreak might prompt unilateral approval of the Tekmira drug TKM-Ebola.

But Tekmira was a textbook "hot stock trap." And "Johnny-come-lately" investors who bought at the peak got burned – the stock was soon down more than 20%.

The Smart Way to Play Zika Virus – and Any Other Global Health Crisis

Now, of course, the Zika virus outbreak I mentioned has journalists and analysts again scurrying for "beneficiary" stocks.

But it's critical to look past the specific story here and consider the bigger picture of what this all means.

By "all this," I'm referring to the Ebola fears of 2014, the Zika virus outbreak of 2015-2016, and even the "Avian (H5N1) flu" worries of 2009.

And whatever "next threat" follows… as I assure you it will.

The ongoing growth in global travel – particularly to the developing world – means the pandemic threat is never far from our minds. And better screening technologies – combined with the faster communication potential of the Internet – means we'll learn about pandemic threats as they emerge in the farthest reaches of the globe.

Because we know that, instead of scurrying after each of the "unique beneficiaries" that emerges with each new threat, I'm focusing on finding investments that will benefit from all the threats – and that will also benefit from the more staid medical needs that exist in between threats.

I'm looking at one company in particular right now… With all the threats we face these days, it's just the sort of stock you want to own for the long haul.

I'll be updating readers more on this company soon. In the meantime, be sure to avoid any "hot stocks" that you hear from mainstream media as the next big Zika virus outbreak "winners." Without a stable history of success in medical treatment, many will end up as the next Tekmira.

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Eight cities across the country are now being closely monitored by the CDC for outbreaks of the deadly (and highly contagious) MDR pathogens. This quickly developing situation has "the potential to harm or kill anyone in the country," according Dr. Tom Frieden, director of the CDC. When you see this story, you'll see exactly why he's right…

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About the Author

Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish... and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.

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  1. Roger O'Daniel | February 3, 2016

    The speaker for the breakfast meeting I attended today was an internationally known epidemiologist. His clients include WHO, CDC, and DOD among others. The Zika virus is spread by a mosquito that can breed its 2,000 or so eggs in the stagnant water of a discarded bottle cap. Ships carry them worldwide in cargo holds. It hitches rides in airplanes. Zika and another virus, not mentioned by WHO, is killing millions in central and south America, particularly Brazil. There are no short-term "magic bullet" cures for either one of these viruses and both of them can kill you.
    His advice is to clean up your trash. Deny the mosquito its stagnant-water breeding spots. Wear light colored clothing. Minimize exposed skin. Use DEET. Wash hands and use common-sense sanitation. Stay indoors or behind tent screens during times mosquitos feed. Cook meat thoroughly, especially poultry, pork and ground meat.
    Mosquitos are carriers of pathogens that will kill up to 4 million people in 2016. Do not be one of them.

    • (Admin) Bill Patalon | February 5, 2016

      Roger …

      GREAT comments. It's funny – by "funny," I mean … "it's an interesting coincidence" .. I had a similar discussion with folks here in house. I'm a big history buff. And as I was writing this, I remember reading about the U.S. construction of the Panama Canal back in 1904.

      Most folks don't realize this, but America wasn't the first country to take a crack at that project. In the 1840s, I believe, the Britts thought about cutting through the Isthmus of Panama, but were put off by the health risks (yellow fever). Forty years later, the French – who were giddy about the success building the Suez Canal in Egypt – took their shot.

      As one historian said, though, they "did not account for the deadly mosquitoes: 22,000 of the project’s workers died after contracting malaria and yellow fever." The death toll was so bad that costs skyrocketed and the canal's owners were forced into bankruptcy.

      So when the U.S. bought the property in 1904, it put the U.S. Army on the case … and the military set to work trying to kill every mosquito in Panama. Thousands of soldiers were sent there … and they drained swamps, coated lakes with oil and used explosives to blow up still water gatherings. Buildings and other areas of risk were doused with pesticides.

      The upshot: When the canal opened in 1914, the death toll among workers was only 5,000, a quarter of the blunted French effort and over a much longer stretch.

      Anyway … just an interesting parallel.

      Thanks for taking the time to offer your comments. They were interesting, well-researched, well-thought-out and generally excellent.

      Hope we hear more from you ….

      Respectfully yours;

      William Patalon III
      Executive Editor/Editorial Director
      Money Map Press LLC

  2. kat | February 3, 2016

    That picture used in the Zika virus story is the ebola strain.

  3. Debbie | February 5, 2016

    The electron microscope image of Ebola is one way of creating an alarmist cast to Zika but it's a bit 'over the top' when the most alarming thing about this virus is the high incidence of infants born with microcephaly vs. the high death rates seen with Ebola.
    Here is a link to an article that shows a photo of Zika with good information too:

    • The Editor | February 10, 2016

      Hi, Debbie – Thanks for writing and thanks for sharing that article.

      We certainly didn't mean to be alarmist with that Ebola "shepherd's crook," rather it was intended to show the pitfalls of the Ebola "hot stock" trap that some investors experienced during media coverage of the West African outbreak. Rather than alarmism, we feel that a "long view approach" and careful stock research is the right move.

      Sorry for the miscommunication. We'll get that fixed.

      Thanks again for your comments.

      The Ed.

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