- How we profit with the companies tackling coronavirus
- A quick start guide for new investors
- A reader wants to place a bet with me…
Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology. Today, I’ll do my best to answer them.
But before I get to this week’s questions, I wanted to tell readers about an exciting event happening next week.
In the world of forex (foreign exchange) trading, one of the biggest names is Andy Krieger.
Andy is best known for “breaking the Kiwi” in 1987. By shorting the New Zealand currency following the chaos of Black Monday, Andy locked in $300 million for his employers… all on one trade. To this day, it’s still considered one of the greatest currency trades of all time.
For the past 30 years, Andy has been keeping a low profile. But on Thursday, February 20, at 8 p.m. ET, he’s hosting his first-ever investing webinar. He’ll reveal a “black swan” event that he believes will take place later this year, and he’ll tell attendees how they can profit from his next big trade.
If that sounds like something you would be interested in, then you can find all the details right here.
Now let’s turn to our mailbag.
And remember, If you have a question you’d like answered next week, be sure you submit it right here.
Investing opportunities… from coronavirus?
Let’s start with a topic that’s likely on everybody’s mind: the ongoing spread of COVID-19, also known as coronavirus.
Hi, Jeff, I’m an Australian-based subscriber of your three excellent newsletters Early Stage Trader, Exponential Tech Investor, and Near Future Report. Given the coronavirus situation worsening globally, I recently learned from the president of Novavax that this biotech company is working feverishly on a vaccine. Should we invest in Novavax?
– Stanley N.
Thanks for being a reader, Stanley. I’m glad you are enjoying my research. When I was an executive based in Tokyo building businesses throughout the Asia-Pacific region, there were times I was down in Sydney or Melbourne almost once a month. I always enjoyed my visits, with the exception of Telstra… It was a painful organization to do business with.
As you likely know, I’ve been covering the progress of COVID-19 extensively in the pages of The Bleeding Edge.
For readers who missed it, the latest news is that the situation is much worse than we originally understood. New numbers out of mainland China were revised up by 15,000 just a couple of days ago. And there is now a total of nearly 65,000 people infected. And the death toll is now up to nearly 1,400.
Obviously, the human toll is awful. But COVID-19 could also have an impact on technology markets. As I reported on Thursday, the Mobile World Congress – one of the biggest tech conferences of the year – was outright canceled.
And companies – including Apple – are scrambling to make backup plans to secure their supply chains. The fear is that COVID-19 will disrupt supply chains coming out of mainland China.
So as technology investors, we need to keep an eye on this trend.
But to get to your question, Stanley, I do believe there are investment opportunities with companies that can combat this virus.
As soon as I realized how significant this virus could be, I immediately started researching companies working on potential vaccines. And I even put my full-time analyst team on the task as well.
Novavax was one of the companies my team and I researched. The stock shot up 146% between January 14 and January 21. The market was responding to rumors that the company was working on a vaccine.
But here’s the thing: I won’t be recommending Novavax to my readers.
It is extremely important to understand a biotechnology company’s entire pipeline when evaluating a company like this.
After all, the reality is that it takes a long time before regulatory approval would be given to Novavax for a vaccine for COVID-19. Yes, trials might accelerate due to the severity of the COVID-19 outbreak, but an FDA approval would still likely be something that would come much later – most certainly not in 2020.
In the case of Novavax, it recently had some bad news with its lead drug candidate, ResVax. The FDA is requiring Novavax to conduct a multiyear Phase 3 trial for ResVax if it wants to try for FDA approval. And the reality is… Novavax doesn’t have the money to do that.
This is another key point about biotechnology companies. What’s the cash position?
In the case of Novavax, the company probably only has enough money for another six months or so. This means that it will have to have a secondary offering, which will dilute the stock. And with the stock up nearly 100% in the last month, I wouldn’t be at all surprised to see a major pullback.
And besides, I’ve found a better investing opportunity…
Stanley, since you’re a reader of Exponential Tech Investor, then be sure you read our next edition. It’s due out Tuesday, February 18 at 5:30 p.m. ET. In Australia, it should hit your inbox early Wednesday morning.
I encourage all subscribers to read this month’s issue. We’ll be investing in a bleeding-edge company that is a front runner for curing COVID-19. As incredible as that may be, it’s only where the story begins. There’s something much bigger at play with this company.
Again, all the details in Tuesday’s edition of Exponential Tech Investor.
And for readers who haven’t joined us, you can become a subscriber today by going right here. I’ll tell you more about Exponential Tech Investor and even reveal another “must own” biotech company on the cusp of curing a debilitating disease.
New to investing? Read this…
Next up, a great question from a reader who is just starting out in the world of investing.
Hello, Jeff. First off, thank you for everything you do for us regular people. I can’t honestly thank you enough for your investment help.
I don’t have a college degree, but due to my desire to move to Japan, I figure it’s something to look into. As I’m enjoying investing in stocks, is there a specific area you’d recommend I study/get a bachelor’s degree in specifically for investing in stocks? Thank you for everything that you do, Jeff!
– Shawn M.
Thanks for writing in, Shawn. I’m happy to hear you’ve benefited from my research. Helping retail investors like you is a big reason why I do what I do.
And it’s great to hear you’re interested in living in Japan. As readers likely know, I spent about 17 years living and working in Japan and have done business there even longer. I still have deep connections to the country and the culture.
One thing to consider is that it is expensive to live in Tokyo. The quality of life, in terms of personal space and apartments, is very different from the U.S. It takes a lot of money to live in a way that is similar to U.S. standards. But daily staples are very affordable, as is public transportation (you don’t really need a car at all).
So if you’re going to Japan to live and work, it is very valuable to have a skill that is highly valued. Computer science, programming, and the use of machine learning are excellent skills to develop right now. There is a worldwide shortage of jobs in this area.
A great way to accelerate learning is to go to a programming boot camp to get up to speed quickly, and then you could pursue a more formal computer science degree.
As to your more specific question about investing… A traditional route of study would be to pursue a degree in corporate finance. Specifically, I recommend a major in valuation. It is a fantastic way to understand how businesses are valued, which is a critical skill in analyzing companies and figuring out if they are undervalued or overvalued.
If you think that you might be interested in something like this, I recommend first reading Investment Valuation by Aswath Damodaran. This is the “bible” for valuation.
And, of course, I encourage you to keep reading The Bleeding Edge. I’ll keep bringing readers the best investing and technology insights that come across my radar.
A reader wants to place a bet. I’m game…
Let’s conclude with a piece of feedback that caught my eye. A reader wants to place a friendly wager with me…
I would be willing to take a bet with you about fusion energy being sustainable with net positive output and at a commercial scale to energize a grid within the next four years. It would be nice but most likely impractical.
– Raj P.
Hi, Raj. Thanks for writing in.
For readers who missed it, fusion energy is nuclear fusion technology. This is very different from nuclear fission – what most people understand as “nuclear power” today.
Nuclear fission is the splitting of atoms, which produces nuclear waste that – unless stored properly – can poison our water and soil. And there are high-profile examples of meltdowns of nuclear fission plants. When I was living in Japan, I lived through the nuclear meltdowns in Fukushima. There were times when my family and I literally could not go outside because of fear of the radiation.
Nuclear fusion is different. At a high level, it’s the power of the Sun channeled for commercial use. And yes, I’m on record saying that we will see a net positive energy output from nuclear fusion in the next four years. For interested readers, you can access my research on this technology for free by clicking right here.
Raj, I know it may sound too incredible to believe. But I have full conviction in this prediction. And if you’d like to place a friendly wager, count me in. We can both keep monitoring this space and see which way this technology goes.
That’s all the time we have for this week. Remember, you can always write to me with questions by going here. I can’t always respond to every message, but I am reading them.
Editor, The Bleeding Edge
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