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
There 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.
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…
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.