When everyone thinks alike, the market has a way of proving them wrong. After all investors have bought, the sellers eventually take control. After you’re #1, there’s only one way to go. That’s one reason the dollar, which you might view as a proxy for the value of the U.S., is down. It was previously perceived to be the most powerful currency on earth; in recent years its reputation has been in decline.
But I’m firmly convinced the long-term trend of the U.S. economy–and thus the U.S. stock market–is still up, and that the market will reflect that by climbing out to new highs eventually. And the time to invest is when public perception is lowest! It seems to me we’re pretty much there.
Investment-wise, there are two ways you can play this. The first is to buy really cheap stocks of good companies. The second is to invest in far younger stocks of faster-growing companies; companies that have the potential lead the market for years to come.
Here’s one, which was recommended two weeks ago in Cabot Top Ten Report. Its name is Myriad Genetics (MYGN), and it’s a biopharmaceutical company that’s working at the molecular level to tackle some very big ailments. Here’s what Editor Michael Cintolo wrote:
“Up to this point, the company’s products have been diagnostics tests that determine an individual’s genetic risk of developing certain kinds of cancer. Although Myriad has never made a profit, revenue growth has been impressive and the company projects that it will reach profitability by the end of its next fiscal year on June 30, 2009. With all that said, it’s the potential of the treatments in clinical trials that’s attracting investors’ attention. In addition to four drugs in preclinical development, Myriad has three drugs (for HIV, thrombosis and cancer) in phase 1 and three (for glioblastoma, melanoma and non-small-cell lung cancer) in phase 2.”
When Mike wrote that, MYGN was trading at 58. In the days since then it’s kept climbing; it hit 65 today! The stock is telling us the future for this company is very bright, and there’s no doubt the earnings report on August 19 will confirm that. Just beware that earnings reports can spark big short-term moves … in either direction.
This is taken from the July 28 issue of Cabot Wealth Advisory written by Timothy Lutts.