“The time to buy is when there’s blood in the streets.”
That sounds harsh, but it is an often-quoted investing axiom credited to Baron Rothschild.
Maybe he could have put it a little more gently, but history tells us he’s right. When there is crisis in the markets, there is also great opportunity.
The member of the wealthy Rothschild family made a fortune in the early 19th century when he bought investments during the famous Battle of Waterloo that ended Napoleon’s reign.
That very same strategy of buying when everyone else is selling helped mint many millionaires and even billionaires over the years.
Here’s what that means for you …
In the last 20 years, two great buying opportunities were created by crises.
The first was the tech bubble in the early 2000s, which provided fantastic chances to buy some of the biggest winners of the last 20 years at deep discounts. Even the strongest and most stable technology companies were crushed as the bubble burst, and many of them went on to gain thousands of percent.
Then there was the 2008-2009 financial crisis that saw the S&P 500 lose more than half its value. Investors panicked and priced many companies as if they were going bankrupt, only to see them come back stronger than before.
A great example is Jazz Pharmaceuticals (NASDAQ:JAZZ). This biotech stock fell to a low of $0.55 in April 2009, and things looked dire as the company cut jobs to stay afloat. Eleven years later, Jazz has several approved drugs on the market along with a robust pipeline of new candidates. From the low in late April 2009 to the high in July 2015, the stock gained 35,000%.
This brings me to today. The world is dealing with another crisis — the Coronavirus Pandemic.
Just like every other crisis in the last 20 years, this is another great opportunity. And that is why I launched my Crisis and Opportunity Portfolio last week.
Last Wednesday, I released three new small-cap stock recommendations to start the portfolio. The plan is to add at least five more stocks in the coming weeks and spread out our purchases in the volatile market. After doing a deep research dive, I decided to add the fourth stock to the Crisis and Opportunity Portfolio today.
The first three stocks have done quite well just one week since the launch of the portfolio. All are crushing the market in the short timeframe, with gains of 39%, 17%, and 11%.
History shows that not only is there an opportunity to buy during a crisis, but that the best performers are the small caps. I see the same thing happening this time, and all three original stocks in the Crisis and Opportunity Portfolio are small caps.
The fourth stock I added after the closing bell yesterday is also a smaller company. With a market valuation of $1.4 billion, the commercial stage biotech has more than 5X potential in the next few years.
It is rare to find a small-cap biotech stock that already has an FDA-approved drug in the market and is on the path to becoming profitable in the near future. Not only does the company have a drug being sold today, it also has a strong pipeline of future candidates. And it expects to start five new clinical trials in 2020.
To add to the bullish case for the small-cap biotech, it recently announced work on a COVID-19 treatment.
Even though the market has been strong the last couple of weeks, there is still a lot of volatility ahead for stocks. As a long-term investor, you want a strategy to continue buying and using the volatility to your favor. That is our plan with the Crisis and Opportunity Portfolio in the next several weeks.
All members of my Early Stage Investor newsletter will receive the new stocks that will be added to the portfolio. Many of you who follow me know I was there for you nearly every day as stocks were falling in March. And today I am here for you as well. This time, instead of talking you off the ledge, I am here to help you prepare for the next big stock market rally.
I hope you join me on our journey to financial freedom.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.
