September 10, 2014
- Sky-high cholesterol at a young age, and the “orphan drug” that treats it
- How to profit when Wall Street’s “experts” are distracted by shiny objects
- One sector set to gain as Obama delivers his ISIS speech tonight
- Neil George spots a supply squeeze that gooses his “ghost income” strategy
- A pointless campaign to pressure Starbucks… the story not being told about corporate income taxes… Scotland’s (and England’s) phony gold… and more!
“The healthy man’s heart disease,” Christian Jacobs calls it. And he should know, because he has it. Bad.
Get set, dear reader, for a roundabout exploration of how to profit when Wall Street’s “best and brightest” lose track of what really matters.
But first, Mr. Jacobs’ story: “By the time I was 9 years old,” he writes, “I had already endured three heart catheterizations and was taking 15 pills each day to manage my cholesterol.”
Against the odds, he’s made it to age 22 and become an advocate for people like himself suffering from a rare genetic disorder called homozygous familial hypercholesterolemia (HoFH).
“Having HoFH is like having cholesterol on steroids times 100,” explains FDA Trader editor Paul Mampilly.
“When you have HoFH, your cholesterol is so high that your arteries are constantly clogged. It’s as if you’re always on the verge of having a heart attack.”
As recently as 2012, Christian Jacobs had to undergo painful treatments every two weeks, akin to kidney dialysis. Blood would be removed from his left arm, the cholesterol removed, and then put back in his body through his right arm. “After each treatment,” he wrote in 2012, “I feel completely drained and weak, as if I just finished running a marathon.”
Mr. Jacobs no longer suffers like that… because he now takes a pill that accomplishes the same task.
The economics for the maker of that pill are compelling, even though HoFH afflicts only 3,000 people. That’s because of the FDA’s orphan drug rules. “Orphan drugs,” Paul explains, “are medicines for diseases that affect fewer than 200,000 people. Orphan drug companies by law are given special privileges and benefits, as an incentive to find medicines for these rare diseases.” Likewise, “the government and insurance companies have agreed to pay a huge amount for the drug.”
Thus does the drug that treats HoFH cost $295,000. And most of that is pure profit. “The expense of discovering a drug comes when you are doing the research and conducting its development to get it through the testing process,” says Paul. “The value was created through all the hard work that went into finding a drug that works so well that Christian can simply take a pill instead of going through all those interventions like what he went through in 2012.”
A few weeks ago, the maker of the drug that treats HoFH issued its quarterly earnings report. It surprised the “expert consensus” of Wall Street analysts.
Which brings us to what Paul thinks is one of the most powerful secrets he’s gleaned from 25 years as an investment pro — including a gig running a $5 billion hedge fund.
Take a hypothetical example of XYZ Co. “Let’s say that an analyst at Goldman Sachs issues a report saying that XYZ Co. is going to generate a 100% sales growth in 2014,” says Paul. “Investors run to buy XYZ stock. If XYZ Co. does not generate the 100% sales growth in 2014, investors are disappointed and XYZ stock plummets.”
But you knew that already, right? Here’s the part you might not know: “Once XYZ stock plummets, analysts downgrade the stock. Then these analysts stop following XYZ stock. And because most investors follow what analysts tell them, they forget about XYZ stock too.
“Not only do investors forget about XYZ stock, but they won’t give XYZ stock a second chance. Even when XYZ starts generating huge sales and big profits, analysts and investors dismiss it. They don’t believe it. They see XYZ’s results as a fluke and dismiss them.”
That, says Paul, is when it’s time to pounce. You can collect all the gains the oh-so-smart “experts” miss out on because they have the attention span of gnat. That’s why he has his readers in the maker of the HoFH drug right now.
[Ed. note: What we just described is only one of Paul’s lucrative strategies. Another seizes upon the chance to spot huge one-day profit opportunities months in advance… and nail them down to the day.
Sounds impossible, but the evidence is indisputable. You can examine it for yourself right here.]
The major U.S. stock indexes are ruler-flat as we write this morning. The biggest mover is the Nasdaq, and that’s up less than a quarter percent.
Treasuries are selling off, the 10-year yield up to 2.53%. Gold is struggling to hold onto its latest round number, now $2 below $1,250.
The dollar rally has extended into today; the dollar index has reached another 14-month high at 84.3.
After a pop yesterday, crude is down more than 1% today, to $91.55. Oil traders seem more than sanguine about stepped-up U.S. military involvement in Iraq — which the president will try to explain on national TV tonight.
If the president’s speech won’t move the energy sector, another sector is sure to benefit.
Even though U.S. intelligence assesses that ISIS poses no threat to the United States, polling data indicate the ISIS beheadings of two U.S. journalists have cowed the American people into demanding Washington “do something”… as long as that “something” is short of sending U.S. combat forces back to Iraq.
That means contractors. During the Iraq War, there were more contractors in-country than they were troops. Ditto Afghanistan, even now.
So the U.S. Army Contracting Command — yes, there is such a thing — posted a notice last month seeking contractors willing to do a deal of at least 12 months.
“As the political premium seems always to be placed on how many troops we have abroad, the pressure to have contractors do as much as possible only grows,” the Brookings Institution’s Michael O’Hanlon tells the military newspaper Stars and Stripes.
As the effort ramps up, Byron King’s Military-Tech Alert will be scouting out which firms stand to collect the lion’s share…
There’s a shortage of municipal bonds, says our income specialist Neil George.
He’s suspected as much for months, seeing fewer and fewer “munis” coming to market. Now there’s confirmation in The Bond Buyer, a respected journal targeted at institutional investors.
Neil sums up the report: “The total amount of voter-approved new issues is running at a near-term historic low that hasn’t been seen since 2009. It’s a fraction of the peak of approvals last seen in 2006.
“The supply for investors and funds is tighter, which is a natural formula for higher prices. Along with plenty of maturities and interest payments that need to be reinvested, it makes for a nice bullish market for us.”
Neil has a one-stop-shopping solution to get you into the muni market. In the space of the last 30 days, it’s up 3.56% — “which is big,” he says, “in what’s typically a steady, slow-moving market.”
Munis are key to Neil’s “ghost income” strategy that lets you collect three paychecks a month, tax-free. Check it out at this link.
From the “because all other problems have been solved” file, behold the pumpkin-free Pumpkin Spice Latte.
Every year since 2003, Starbucks rolls out the fall-themed beverage. Naturally, it did so this year in the decidedly summer-like month of August. (And why not? Kmart is already doing Christmas commercials.)
Now a blogger named Vani Hari — better known to her fans as the “Food Babe” — has launched a broadside against Starbucks. “While [Starbucks lists] some ingredients on their website, they still do not list the ingredients in their most popular items: their drinks.”
We’d never heard of her until yesterday, but what do we know?
Well, fair enough, and if Ms. Hari wants to bring her fans’ pressure to bear and achieve change without government’s heavy hand, we’re cool with that. Earlier this year, her legions successfully petitioned Subway to remove a chemical additive from its bread.
But really… No pumpkin in the Pumpkin Spice Latte?
Starbucks confirms that, by the way: The beverage, per a spokeswoman, contains the “unmistakable pumpkin pie spices of fall — cinnamon, ginger, nutmeg and clover — but not actual pumpkin.”
“It’s called a pumpkin spice latte,” points out another food blog called Eat Drink Better. “And I do believe the emphasis is accurately reflected on ‘spice.’ Because putting actual pumpkin into coffee would be pretty darn disgusting.”
“Averages tell only half the story,” a reader writes melding our recent discussions of taxes and startups — “as one can drown in a pond of 5 inches average depth.
“Some argue that average effective tax rates for U.S. corporations compare favorably internationally. Not told is that companies like GE pay zero taxes while small businesses, for the most part, cannot avail themselves of special deductions and credits aside from the fact that most startups pay taxes at a personal tax rate.
“Taxes and regulations are the Nos. 1 and 2 reasons cited for the lack of startups and growth of small business, not the lack of access to capital.
“If our government wants to equate patriotism with taxes, they ought to apportion votes according to tax payments.”
“I know a strong case can be made,” a reader writes, “that it makes no sense for the Scots to go it alone. I say do it anyway! Break free of the English once and for all. FREEDOM!
“I just hope they don’t really think they’ll ever see any of that phantom gold the Bank of England claims to hold,” he goes on, bringing us back ’round to one of our items yesterday. “As the banker on South Park would say, ‘Annnnd it’s gone.’
“But I have a potential solution. Maybe the BOE can just pretend to send the gold and the Scots can pretend to receive it and store it in pretend vaults. They’re cheaper than real ones.
“Heck, it’d be like holding unallocated ‘gold’ at one of the big bullion banks. So much cleaner than holding actual metal. And hey, as long as nobody ever actually asks for the physical metal, phantom gold is every bit as good as the real thing!”
The 5: Why not? That’s the fiction that underlies nearly every trade in the gold market anymore.
Yeah, we’re cheering on the “yes” forces in Scotland too. We approve wherever on the globe there’s a move to decentralize and devolve political power. As Doug Casey once quipped, the proper number of governments in the world is 7 billion.
That said, the leaders the Scottish independence movement seem way too keen to join the European Union…
“Here’s why I’ll be looking at smartwatches,” a reader writes after we mocked them mercilessly yesterday. “The latest phones are getting too big for a female to carry around comfortably in all situations.
“Having something on your wrist seems like it would be very useful when you want to travel light and need it only for more ‘just in case’ reasons (e.g., going for a run, hike, etc.). May get one for my son too, as he’s an avid runner and I worry about him getting hurt, etc. Of course, whether I actually get one will depend on the price.”
The 5: The Apple Watch starts at $349. And you have to own an iPhone already, or the thing’s just a bracelet.
At least you don’t have to don’t have to buy a new phone. Unless you’re still on an iPhone 4s or older. Heh…
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Once again, the real significance of the smartwatch is that we’re talking about millions more devices connecting to the Internet. That’s in addition to smart refrigerators, smart coffee makers, smart thermostats and all the other devices linking to the Net via Wi-Fi.
All those new devices and the need to expand Internet capacity to accommodate them? It adds up to a $19 trillion market.
Yes, you can collect a piece of that. Maybe even make eight times your money. Here’s where you can get started.