We're now less than two months away from the end of 2020. (Thank goodness.) It's been a roller coaster, to say the least.
Think back to everything we've endured...
An unknown virus from China made its way around the world, shutting down the global economy. Businesses closed... Schools closed... Churches closed. Weddings, concerts, and large gatherings were canceled.
We stopped shaking hands. We started wearing masks. You couldn't even visit your own grandmother.
And stocks went on the craziest ride I've ever seen in my 20 years of investing.
Not only did we see the fastest stock market drop in history – down 30% in 22 days – we also saw the best 50 trading days in history, with the S&P 500 rallying 37.7% from March to early June.
Now, businesses have started to reopen, and people are getting back to work... and some semblance of a "normal" life. We've also seen a new surge in COVID-19 cases in several states across the U.S.
And yet, the second quarter was the best quarter the Dow Jones Industrial Average has seen since 1987. The S&P 500 experienced its largest gain since 1998, and the Nasdaq capped off its best quarter since 2001.
Equity funds also outperformed, posting their strongest quarterly performance since 1999. The average equity fund returned 22% in the second quarter.
But the sector that has really been on fire in recent months shouldn't be surprising.
I'm talking about biotech. And importantly, the outperformance we've seen so far shows that those gains can continue...
I'm convinced that one of the biggest winners of the decade will be biotech stocks. The industry hasn't seen a transformational change in many years.
Well, now it's coming.
We should all expect to be blown away by what happens in the coming 10 years.
Genetic testing and gene editing will help identify and cure diseases. Artificial intelligence will rapidly speed up drug development. We'll all have our genotypes on file, so any prescriptions will be tailored to what works best for us personally. Personalized medicine could result in a huge spike in longevity. And that's just the start.
Now, the COVID-19 pandemic has put an even brighter spotlight on the future of health care – and stocks have reacted accordingly.
Just take a look at the chart below. It shows the biotech industry's outperformance versus the S&P 500 and gold since March. Gold in particular is often viewed as a hedge during tough market environments. But incredibly, biotech has been the biggest winner...
Biotech stocks are breaking out – and fast. But this rally isn't slowing down anytime soon.
COVID-19 has sickened more than 40 million people around the world so far, and at least 1 million people have lost their lives to the pandemic. So the stakes could not be higher for these companies right now.
Innovative biotechnology companies have stepped up to the plate. They're racing to create what could become a life-saving vaccine for hundreds of thousands of people.
I'm optimistic we could see one as soon as the end of this year. And as investors, we need to pay attention.
History shows that you can make big money investing in world-changing drug discoveries. The biggest winners of this transformative megatrend will be biotech stocks – especially small biotech stocks set to grow.
In short, this sector is set up to keep winning in the years ahead. That's especially true as the economic recovery – and bull market – continues.
The second quarter was the strongest quarter in years for stocks. This happened because the market is forward-looking... It prices in what is likely to happen in the future – not what has already taken place in the past.
A lot of people are betting on America. They're betting on the ingenuity, grit, and determination of people all around the globe.
As we get ready to turn the page on 2020, I continue to expect great things ahead – albeit with continued spurts of volatility.
COVID-19 will remain an area of focus and concern. But it can also be viewed as a fire helping to drive the hypergrowth trends of the future.
In the meantime, stimulus will continue to find its way into the market, helping to fuel stocks higher through it all. Innovation will endure. Medical breakthroughs will be discovered. Artificial intelligence software will evolve.
The final weeks of 2020 are shaping up to be interesting. Expect plenty of curve balls... But also expect a lot of opportunities to generate life-changing wealth.
Regards,
Matt McCall
Editor's note: TONIGHT at Steve's big Melt Up event, Matt will join us to discuss the future of the bull market – including the megatrends that will send stocks soaring during this explosive period. Like Steve, he's also giving away the name and ticker of an investment you should buy right now... So make sure you join us online at 8 p.m. Eastern time. Reserve your spot for free right here.
Further Reading
Biotech is an exciting sector. With the continuing threat of the coronavirus pandemic, this space is more important than ever. And our colleague Dave Lashmet has identified a type of treatment that could greatly reduce the severity of COVID-19 infections... Read his essays here and here.
"It might seem crazy to invest in a hot sector after a run like we've just seen," Chris Igou says. But if you've read DailyWealth for long, you know that following the trend is a smart idea. And with a major uptrend on our side right now, this sector could soar even higher... Get the full story here: Why This Hot Sector Could Rally Double Digits.
You might expect this sector to be trading at record valuations after the impressive rally it has staged. But that's not the case. And it could soar much higher before valuations reach peak levels...
CANNED GOODS AND AEROSPACE TECH ARE A BOON FOR THIS COMPANY
Today, we see how diversification can help businesses stay strong in a crisis...
In a market prone to ups and downs, companies that successfully diversify their revenue streams are often protected from big swings. We've seen that recently, as the COVID-19 pandemic has rewarded companies that are able to provide consumers with the "essentials." This master metalworker is another star example...
Ball (BLL) is the leading supplier of sustainable aluminum packaging for beverages, foods, and household products. Companies like Coca-Cola and Molson Coors rely on Ball's cans for their products. In the second quarter, its North and Central American beverage-packaging segment saw operating earnings rise to $189 million compared with $141 million during the same period in 2019. And while Ball is best known for its metal cans, the company also has a $2.1 billion backlog of orders under contract from its aerospace business... so it can provide mission-critical solutions to commercial and governmental customers.
BLL shares have rebounded swiftly following the initial impact of the COVID-19 pandemic. They're up 78% from their March lows. As demand remains strong for both aluminum packaging and aerospace technologies, Ball's stock should continue higher...
