I don’t watch the news much anymore. Frankly, I’m sick of the clickbait style they apply to ‘news’ these days. Many news stations have become more tabloid than actual quality journalism.
Also, because the news is bloody depressing. Back in the olden days — when I was just a wee tacker in the 80s — there was one time during the day when you got the news. At 6pm each night.
That was it. You wanted to watch the news? You tuned in at 6pm every night. I think it was only a half hour news report too.
The first 10 minutes was about breaking news or the important domestic news of the day.
The next 10 minutes (roughly, after breaks) was about international news and maybe a feel-good story or two.
And the final third (whatever time was left) was for sport and weather.
That was your daily news fix, folks. And it was not only bearable, but you looked forward to seeing what was happening in the world each day.
Of course, there was also the newspaper, but they were just a little slower at getting things from story to print and into your hands.
Then somehow the news became an hour. And then there was the morning news as well. Then the afternoon news to supplement the nightly news. And the evening news. Then there were 24-hour news channels.
Next thing we know we’re bombarded 24/7 with ‘news’ from a thousand channels all now competing for your eyes and attention. If there’s anything to signify the ‘attention economy’ we’ve now become, it’s the growth in volume of news and the decrease in quality of it.
The upside and downside to all-access news
The upside of this (if you can believe there is one) is that we’re now more connected to what’s happening in the world than ever before. And that’s good. We know when a dog sneezes in China — ‘cause that sort of thing makes the news it seems these days.
In all seriousness, though, we quickly find out when things happen. That’s the beauty of 24/7 news. The downside of this ‘instant access’ is the news knows that fear sells.
Which means 24/7 (typically) we’re bombarded with fear-driven news.
It’s a big part of the way in which our future generations seem to be moulded into the belief the world is a big, bad, scary place. Yes, in many aspects it is, but if that’s all you believe, then you miss the glorious opportunity and future coming our way.
But today’s Money Morning isn’t about our exciting, glorious future. Nope, sorry. It’s about bad news and how to hopefully turn a profit from it.
2014 — the year of Ebola.
You’ve heard of the Ebola virus, right? I’ll assume you’ve heard of it and know it’s a pretty scary, nasty virus that kills people.
Do you remember in 2014 when there was a massive outbreak of Ebola in West Africa?
If not, in early 2014 the World Health Organization (WHO) reported cases of Ebola in Guinea. This quickly spread to Sierra Leone and Liberia. And from there it kicked on again spreading to more African countries…and even outside of Africa.
All in all, it took two years for authorities to find the right way to control and eliminate this outbreak.
The Centres for Disease Control and Prevention (the CDC) said:
‘The identification of these early cases [in Guinea] marked the beginning of the West Africa Ebola epidemic, the largest in history.’
Things took a turn for the worse however, when there were reported cases in the UK and the US.
It was the news of Ebola coming to the Western world’s doorstep than amped up the fear. And it was a news field day. Every major news outlet on the face of the planet was reporting about the Ebola outbreak.
It was terrifying.
What this did however, was create a small window of opportunity for the savvy investor. You see when there are disease outbreaks like this, pharmaceutical companies get going and try to find a solution for these outbreaks.
And the Ebola outbreak of 2014–16 demonstrated this perfectly. And public companies that had been working on Ebola treatments and cures went nuts.
Not only was it companies working on treatments for Ebola, but even companies that made hazmat suits took off. According to MarketWatch, some of the companies that saw huge gains from the Ebola crisis were:
- Tekmira — up 190% from Jan to Oct 2014
- Lakeland Industries — up 364% from Jan to Oct 2014
- Chimerix — up 136% from Jan to Oct 2014
- Alpha Pro Tech — up 251% from Jan to Oct 2014
These ‘Ebola stocks’ were opportunities for profit based on trading bad news events.
Now this kind of trading isn’t pretty. But it’s effective if you can play it right, and know what bad news events you can find short-term profits on.
And it appears that right now, we might be on the cusp again of another ‘Ebola-style’ trading opportunity.
We’re not talking beer stocks here
If you’ve been paying any attention to anything in the last few days, you’ll know there’s another ‘outbreak’ on the cards. You don’t even need to have seen the news or read a paper to know this. Even on Triple J this morning they were talking about this new outbreak like it was about to end us all.
It doesn’t appear to be that bad…yet. But we’re looking at a new disease outbreak from China called the Coronavirus that’s starting to spread and cause great concern for people.
Also, the news is all over this as it’s getting eyes and attention. Which means there’s a vicious self-perpetuating fear cycle that’s just kicking off.
The Coronavirus, right now I admittedly don’t know much about. And I can’t categorically say which companies might be the next batch of ‘Ebola stocks’ relating to this new outbreak. But what I will say is I’m hunting them down right now.
If Coronavirus spreads further — and there’s just one reported case of a man in the US with it — then all hell could break loose. This will escalate as a bad news story and people will begin to freak out.
When that comes, and it looks like it’s coming soon, then it might be worth considering having a few dollars in some ‘Corona stocks’. And I’m not talking about the beer. I mean the pharmaceutical companies and possibly hazmat suit companies that stand to leverage this outbreak.
It might not deliver the kind of Ebola-style peaks we saw in 2014, but it still might be a profit window too good to pass up.
Keep an eye on this developing opportunity. It’s early days still, a bit like March 2014. But if it keeps unfolding, it could be the profit story of 2020.
Editor, Money Morning
PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here.