Hillary Tweets; An Industry Tumbles

If there was ever an example of senseless investor panic, this week provided it.

This particular panic struck the biotech sector, with the iShares Nasdaq Biotechnology ETF (NASDAQ: IBB) losing more than 6% since Monday morning — even though the inciting event involved just a single company.

With nothing more than a 21-word tweet, Hillary Clinton turned an entire industry upside down:

The price gouging to which she referred involved Turing Pharmaceuticals and a drug, Daraprim, that Turing acquired last month for $55 million from Impax Laboratories (NASDAQ: IPXL).

And on the surface, it does indeed shock the system a bit.

Price per tablet for Daraprim, which is used in the treatment of HIV and other diseases that weaken the immune system, was suddenly raised from $13.50 to $750 — an increase of 5,500%.

For a drug that is listed on the World Health Organization’s List of Essential Medicines, such a sudden spike from a company run by a 32-year-old former hedge funder definitely comes off as unconscionable.

However, the market’s response to Hillary’s blanket statement was nowhere near what you’d call proportionate.

Isolated Problem… Wide-Spectrum Losses

Perhaps it’s just the nature of Twitter, which may have not provided her with enough space to name the company or its CEO, Martin Shkreli.

Perhaps it was that a vast majority of people didn’t bother clicking the link she provided, which would have filled in all those essential details.

Or perhaps it was her vague promise to “take it on” that got investors running.

The fact is, because of her words, billions in investor wealth evaporated as panic selling sent shares of major pharmaceutical brands, including three of the biggest — Pfizer (NYSE: PFE), Novartis (NYSE: NVS), and Sanofi (NYSE: SNY) — plunging during Monday’s trading session.

None of those companies had much of anything to do with Turing, Daraprim, or Martin Shkreli, besides the fact that they shared a common industry… and, apparently, the wrath of Hillary Clinton.

Not fundamentals, not macroeconomic news, not even the death of a high-level executive or some other catastrophic event, but a mere threat of future policy from a political figurehead who may or may not get her party’s presidential nomination caused billions to be lost…

Just like that.

Now, if a single tweet can do that, just imagine what a bigger headline might produce in the hearts of millions of investors across the world.

Panic selling hasn’t just ruined trading days; it’s started recessions, and it will do so again.

China fears, national debt, employment statistics, changes in interest rates… These problems are all bigger, deeper, and more far-reaching than pharmaceutical price gouging or any social media posts resulting therefrom.

It’s one of the most frustrating obstacles to deal with as a trader, and it’s one of the most frightening aspects of being an investor in general.

Panic, fear, and your money leaves you — even if your choice of investment made all the sense in the world.

In a way, it’s like driving a car. No matter how careful you are, somebody else’s mistake can end up costing you big.

So what do the smartest investors do to avoid this pitfall?

Stop Fearing Macro Trends By Avoiding Them Altogether

Simple: They avoid the investments that can be affected by the masses, focusing instead on those that are known only or predominantly by the steady-nerved pros.

In the long run, it’s the only way you can protect yourself from general market downturns.

The only problem is finding these companies at the right time and then knowing when the time is right to get out — without relying on macro trends to guide your trades.

And that’s where the real work comes in.

I’ve been studying the way the pros do it for most of my professional career, and as most things that are fundamentally sound tend to be, the methodology behind this sort of risk-reduction is fairly simple.

In fact, there’s nothing special about it — other than the specific type of stock this method targets.

Easy to master and remarkably de-risked in nature, this approach, which I call “macro trend-insulated trading,” has been used by pros and casual investors alike to turn modest sums into small fortunes.

One of the first moves is to start getting your stocks from non-mainstream exchanges. If you want to be subject to mass panic selling, then there are no better places to be than the NYSE or Nasdaq.

Focusing on more obscure exchanges like OTC already removes a large hunk of that hazard… But that’s only the start.

I’ve recently compiled a presentation that details not just how it’s done and how it works but also some of the success stories that macro trend-insulated trading has produced over the years.

You’ll be shocked when you see these. Completely normal, everyday people — people you would never imagine being millionaires — using a safe, simple method to become forever independent of problems in the economy at large.

I urge you to check out this presentation and see for yourself. It’s free, and access is instant.

Fortune favors the bold,

Alex Koyfman

Check us out on YouTube!

His flagship service, Microcap Insider, provides market-beating insights into some of the fastest moving, highest profit-potential companies available for public trading on the U.S. and Canadian exchanges. With more than 5 years of track record to back it up, Microcap Insider is the choice for the growth-minded investor. Alex contributes his thoughts and insights regularly to Energy and Capital. To learn more about Alex, click here.