When fears grip the public about the spread of virulent diseases such as Ebola and other malicious conditions, it is time to assess the situation and enact strategies to enhance safety…health-wise and financially as well.
World health authorities believe that that Ebola and other contagious maladies will have a significant effect on the world economy. The U.S. is enacting emergency procedures and our healthcare industry is gearing up for what will be a difficult challenge for society at large and our medical professionals in particular. What should we consider doing?
Ebola has, of course, grabbed the lion’s share of the media attention but that is only the most reported since it is so deadly. Keep in mind that a troubling assortment of communicable diseases are spreading across our society. It is no coincidence that many communicable diseases have been unleashed at our unguarded southern border as many illegal immigrants are entering the U.S. with a variety of medical conditions that would have been stopped in prior years.
Regardless, we will be forced to deal with all of this and whatever health and economic fallout unfolds. As responsible individuals, the first and most important step is to get ourselves and our loved ones informed and prepared for both avoiding and/or dealing with potential infection. We can’t let fear allow us to act irrationally which would only make matters worse. Talk to your doctor and other health professionals to safeguard yourself and your loved ones.
Now I am not a doctor (and I don’t play one on TV), so it is better to focus on this issue from the perspective of investors and speculators. Given that…what should we consider?
For Investors
The major focus of what I have emphasized for investors in recent years is boiled down to a single phrase…”human need.” Considering that these alarming viruses are occurring at a time that the economy is extraordinarily weak, investing in “human need” takes on special significance. Here are some points that investors should consider:
• Quality Healthcare large-cap stocks. Discuss with your financial advisor if large cap healthcare stocks such as Abbot Laboratories (symbol ABT), Johnson and Johnson (JNJ) and Bristol-Myers Squibb (BMY) and other majors make sense.
• Healthcare ETFs. If individual stocks are too aggressive or risky to choose, then consider a healthcare exchange traded fund (ETF) that focuses on the healthcare industry. The most traded one is the SPDR Health Care Select Sector Fund (symbol XLV).
• For those investors that want to be a little more aggressive (but still diversified across companies), then consider SPDR S&P Biotech ETF (symbol XBI). Given many factors besides Ebola (such as the aging of America, obesity, etc.), biotech will have good long-term prospects.
For Speculators
For those that are looking for faster profits and don’t mind tolerating the higher risks and gyrations of short-term speculating, consider drilling down to find small cap stocks of companies involved in cutting –edge drug research. In recent weeks, major financial sites such as Marketwatch and Bloomberg reported that a batch of small cap stocks in this niche experienced strong gains. There can also be significant downside as well. I read an article of a small company in this same niche that saw its’ stock price plunge when their experimental drug failed to treat Ebola as expected.
The bottom line is that doing your stock research and making sure that the underlying companies have consistent profits and proven products will yield healthy profits… Ebola or not.
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Paul Mladjenovic, CFP is a national seminar leader and educator and the author of Stock Investing For Dummies, Precious Metals Investing For Dummies and Micro-Entrepreneurship For Dummies. Investors can get his free newsletter and wealth-building reports at his website www.RavingCapitalist.com.
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