The current crisis in equity markets will be viewed as a great opportunity by many more experienced investors
Markets have entered another tail-spin. This week has seen sharp selloffs in (especially) North American and European markets.
For novice investors, such plunges generate great fear – even panic. More seasoned investors see a glass-half-full scenario.
Yes, their investing portfolios have taken a sudden, temporary hit. But it is volatility that creates market opportunities.
If stocks always traded at precisely their intrinsic value, there would be little opportunity for profit. However, because market sentiment can change suddenly and drastically, astute investors can identify particularly strong buying and selling opportunities.
Sell when investors are euphoric and valuations are at their peak. Buy when there is blood in the water.
Western central banks have a slavish obsession with propping up equity markets. Consequently, most market experts now look at such selloffs as obvious buying opportunities. But some sectors are positioned to do much better in the current coronavirus-dominated environment.
Where should investors be deploying their buying dollars in the present selloff?
Psychedelic stocks offer relative security in current market conditions
Talk about “security” with respect to any emerging biotech sector and many investors will simply roll their eyes. By definition, emerging markets represent higher levels of risk (in relative terms).
At the same time, there are good reasons to regard the psychedelic drug sector – and psychedelic stocks – as representing an effective hedge against COVID-related economic and market uncertainty.
Psychedelic Stock Watch recently explored this issue in a feature article.
Psychedelic drugs were already viewed by a lot of astute observers as the best investment opportunity today in life sciences even without a coronavirus pandemic. COVID-19 merely amplifies this potential.
For these reasons, many investors will see psychedelic drug stocks as not only a spectacular growth opportunity, but also their best hedge against COVID-19 economic/market risks.
As everyone knows who is investing in psychedelics, the primary driver of the psychedelic drug industry is the Mental Health Crisis. Over 1 billion people grapple with stress-related disorders like depression, anxiety, addiction and PTSD alone.
As most people also know, the COVID-19 pandemic is causing this Mental Health Crisis to rapidly worsen. Rates of depression, anxiety and addiction are all soaring.
Existing medical therapies for these conditions are grossly inadequate. Clinical studies on psychedelic drugs are showing enormous promise – across the board.
The medical need for psychedelic drugs will rapidly worsen in any “second wave” of the coronavirus pandemic. And if pandemic issues suddenly/quickly recede? There are still 1+ billion people standing in line for psychedelic-based medicines.
Economic factors are driving the legalization/commercialization of psychedelics
Then there is the economics.
The Mental Health Crisis is expensive. Overall spending on mental health services in the U.S. alone was estimated at $300 billion per year (Harris Williams & Co.) – before COVID-19.
The indirect costs of the Mental Health Crisis are even more astronomical. The Mental Health Crisis was already costing the global economy $1+ trillion per year in lost productivity alone – before COVID-19.
A rapidly worsening Mental Health Crisis means rapidly increasing treatment costs for mental health disorders and rapidly escalating productivity losses for the global economy.
Governments can’t afford these additional costs. Psychedelic drugs can greatly mitigate the economic pain on both fronts.
Unlike conventional therapies for depression/addiction/PTSD, psychedelic-based therapies actually work. People are getting cured.
As a recent economic study from MAPS shows, psychedelic-based therapies are not only potent medicines, they are also economically cost-effective.
As psychedelics-based therapies actually cure sufferers of these stress-related mental health disorders, they once again become productive members of society. The “productivity losses” from the Mental Health Crisis go down.
The worse the economic crisis gets from the COVID-19 pandemic (and the weaker our economies get), the more economic pressure on governments to fast-tack the approval of psychedelic drugs to reduce these enormous costs. That is an effective COVID hedge.
The fundamentals for psychedelic stocks are clearly supportive in current conditions, whether or not the second wave of COVID-19 continues to worsen. Expectations are for equity markets to bounce back as soon as the current panic recedes.
What investors really want to know is where are the best buys in psychedelic stocks?
Psychedelic stocks on sale
The recent plunge in broader markets has rudely interrupted the new rally in psychedelic stocks. As investors take profits (and some short-sellers move in), there have been some significant drops in the share prices of leading psychedelic stocks.
That is enough of a “sale” to entice any bargain-hunter.
Investors need to do their own due diligence to identify the best value among psychedelic stocks. But Psychedelic Stock Watch is here to help.
For information on individual psychedelic drug companies:
For information on the general investment drivers for the psychedelic drug industry:
Everyone likes a sale. Getting more for less.
One variable that no one can answer (today) is how steep these discounts will get before markets bottom. Nibble on the great bargains in psychedelic stocks today. But shop with care.
The psychedelic drug story is just getting started. A new industry is being born.
Investors who miss out on the current sale will get future buying opportunities.
DISCLOSURE: The writer holds shares in MindMed Inc, Numinus Wellness and Mind Cure Health. Mind Cure Health is a client of Psychedelic Stock Watch.
Published at Thu, 29 Oct 2020 06:00:06 +0000