THE ETF TO WATCH NOW!!!
ETF's (Exchange Traded Funds) are a very popular tool to the average investor. They are extremely popular tools for long term investors and a common occurrence in Traditional and Roth IRAs. Basically it's like an index fund, but can be more targeted and smaller, thus riskier. Today I'm going to talk Bio/Pharm plays and how they can be utilized in one specific way to maximize your profits in this risky sector!
I have talked about Bio/Pharm plays before. I'd like to add that my last call, ticker $SPPI is up 30% the last couple of days making me a nice profit, but that's from a previous blog post. If you read that post you'll remember me talking about how risky these plays can be, in fact I had one the other day drop 70% on some terrible news. These plays are not for the faint of heart nor the new investor. You need to be careful, and experienced with these because they can drop on your head like a hammer out of nowhere! If you have been investing for a while you'll remember $ZOM which was a really hyped stock. It was supposed to release results that would shock the market and in response their stock tripped and then some! Sadly for those who bought in later, the news came out months before it was supposed to, and although the news was good, the catalyst was spent and the stock dropped 80% in a few days. It has not yet recovered even close to the price before the news came out.
ETF is in the title so why am I not talking about the best ETF to watch now?! Well here it is. There is an ETF that is based on the sector of Bio/Pharm plays. The amazing thing with this is that you get all of the good and bad news, and it almost evens out into an uptrend over time. The Bio/Pharm sector is filled with giants like $JNJ, $ABBV, and $PFE (yes I know these tickers by heart now since I'm such a stock genius). Over time this ETF has done very well as the Bio/Pharm sector continually grows in side and profits. The bonus of $LABU (big ticker reveal here) is that it's extremely beat down due to the recession/bear market we have been in. These plays are the first to drop because a large portion of them are penny stocks that don't make a profit.
From highs on the 1 year chart $LABU is down over 80%. but from lows its up 191%. You may ask "well why would I buy something that's up so high?" and that's an excellent question. Since the market has been rebounding, this ETF has been running like crazy. The beauty of its chart right now is that while there is some wild downside, the upside is quite insane as well. You wouldn't want to buy this thing at lows because well, that might now be the low. We have seen some nice support and its rebounding quite nicely. Unfortunately this ETF does not pay a dividend which is a bummer, but besides that we have some insane upside to hit before we get to all time highs. Regardless I'll be adding some of this to my IRA, not a crazy amount but enough to make some nice reward in the long term. Be careful with this though because if this is a dead cat bounce in the market this thing will not hold up well. As always I'm not a financial advisor so do you own Due Diligence and enjoy these ideas I'm putting out there!
Hopefully you all had a great Monday. Be profitable this week and make sure to share any stocks you are watching in the comments below! I love seeing what other people are interested in. Good luck out there traders!!
-Spence
$LABU 1 Year Chart
