We’re officially halfway through 2020. (Thank goodness.) It’s been a roller-coaster six months to say the least.
Think back to everything we’ve endured …
An unknown virus from China made its way around the world, literally shutting down the global economy. Businesses closed. Schools closed. Churches closed. Weddings, concerts, and large gatherings were cancelled.
We stopped shaking hands. We started wearing masks. You couldn’t even visit your own grandmother.
And stocks went on the craziest ride I’ve ever seen in my 20 years of investing.
Not only did we see the fastest stock market drop in history — down 30% in 22 days — we also saw the best 50 trading days in history — up 37.7% on the S&P 500.
As we’ve moved into the summer months, businesses have started to reopen and people are getting back to work … and some semblance of a “normal” life. We’ve also seen a new surge in COVID-19 cases in several states across the United States.
And yet, the Dow just wrapped up its best quarter since 1987. The S&P 500 experienced its largest gain since 1998, and the Nasdaq capped off its best quarter since 2001.
Equity funds also outperformed, posting their strongest quarterly performance since 1999. The average equity fund returned 22% while research firm Refinitiv Lipper’s U.S. Diversified Equity Funds macro-classification climbed 23.5% and posted its best quarterly return since 1979.
But the sector that’s really been on fire these last few months shouldn’t be surprising. In fact, six months ago I said it would be one of the strongest industries not just this year — but this decade.
I’m talking about biotech …
I’m convinced that one of the biggest winners of the decade will be biotech stocks. The industry hasn’t seen a transformational change in many years.
Well, it’s coming.
We should all expect to be blown away by what happens in the coming 10 years.
Genetic testing and gene editing will help identify and cure diseases. Artificial intelligence will rapidly speed up drug development. We’ll all have our genotypes on file, so any prescriptions will be tailored to what works best for us personally. Personalized medicine could result in a huge spike in longevity. And that’s just the start.
Now, the COVID-19 pandemic has put an even brighter spotlight on the future of healthcare — and stocks have reacted accordingly.
The iShares Nasdaq Biotechnology ETF (NASDAQ:IBB) is up more than 15% so far in 2020, and it skyrocketed 26% in the second quarter. Another ETF that tracks the sector, the SPDR S&P Biotech ETF (NYSEARCA:XBI), surged an incredible 44.6% in the second quarter and hit an all-time high in June.
Just take a look at the chart below, which shows the biotech industry’s outperformance versus the S&P 500 … gold … and even bitcoin since March! The latter two are often viewed as hedges during tough market environments.
Biotech stocks are breaking out of a seven-year consolidation phase — and fast. But this rally isn’t slowing down anytime soon.
COVID-19 has sickened more than 11 million people around the world so far, and at least 539,000 people have lost their lives to the pandemic. So the stakes could not be higher for these companies right now.
Innovative biotechnology companies have stepped up to the plate and are racing to create what could become a life-saving treatment for hundreds of thousands in the form of a vaccine.
I’m optimistic we could see one as soon as the end of this year.
History shows how you can make big money investing in biotech companies discovering world-changing drugs in a country that embraces medical breakthroughs. The biggest winners of this transformative mega-trend will be biotech stocks — especially small biotech stocks set to grow large.
Looking Ahead to the Economic Recovery
It’s no coincidence that stocks just closed their strongest quarter in years even as the world appears to be spiraling out of control.
Stocks just closed their strongest quarter in years because the market is forward-looking. It prices in what is likely to the happen in the future — not what has already taken place in the past.
And we discussed in the July 3 MoneyWire, a lot of people are betting on America. They’re betting on the ingenuity, grit, and determination of people all around the globe.
As we turn the page to the second half of 2020, I continue to expect great things ahead — albeit with continued spurts of volatility.
COVID-19 will remain an area of focus and concern, but it can also be viewed as a fire helping to drive the hypergrowth trends of the future. I also expect a lot of investors’ attention will be on the upcoming election — which we all know is going to be a heated one.
In the meantime, stimulus will continue to find its way into the market, helping to fuel stocks higher through it all. Innovation will endure. Medical breakthroughs will be discovered. Artificial intelligence software will evolve.
The final six months of 2020 are shaping up to be interesting. Expect plenty of curve balls. But also expect a lot of opportunities to generate life-changing wealth.
The key — as always — is getting in early. And that’s our goal — to uncover these the world’s biggest investment opportunities before the masses find out about them.
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.