Rogue Investor

 
Issue #20 • June 24, 2004
Greetings Rogue Investors,

As a first order of business, I want to give you the link for the new stock screens: http://www.rogueinvestor.com/stock_screens

Enjoy!

Second, I want to share with you what I have been doing for the past nine months.

About two years ago, I really started to research what would likely be the next big investing trend.

Why?

Every decade, one investing group goes up 10-fold or more and the best companies in this top-investing group go up 100-fold or more. However, the only way to realize these incredible gains is to get in early, when few others are paying attention.

I have already been giving you plenty of hints in my past newsletters about where the biggest stock market gains will come over the next twenty years. It will be Health Care.

When you realize that worldwide, hundreds of millions of people are getting old and are going to depend heavily on health care, nothing can really stop the huge Health Care Investing Bonanza.

But the real question is: How can you discover, early on, which health care companies will be the top performers, delivering 10- to 100-fold returns in 10 years or less?

For the past nine months, I have been writing a new book to help you answer that question.

Titled appropriately Rogue Health Care Investor, this new book profiles how you can potentially earn a 10- to 100-times return on your money over the next decade by discovering and investing in the top health care companies.

Virtually every investor would like to get in a time capsule and go back to the early 1980s so they could buy Microsoft, Intel and many of the other tech stocks before they went up 100- to 1,000-fold during the next 15 years.

However, the boom in technology stocks in the 1980s and 1990s will pale in comparison to the health care boom over the next decade and beyond. Investment returns of 25 to 40 percent per year will be possible for savvy investors. Many health care companies will go up 10 fold in 10 years, some will go up 100 fold in 10 years and a few will go up by a factor of 1,000 fold in 10 to 20 years.

Here is an example of a company I profile in the book that has the potential to go up 100 fold in the next 10 years.

Insmed (INSM). Diabetes is a huge, worldwide problem. In the United States alone, two billion dollars per year is spent fighting the disease and millions of new diabetics are created each year. However, some diabetics do not respond well to insulin therapy. Insmed, a small health care company, has invented a protein-based drug that has already been approved for use by the FDA for individuals who do not respond to insulin. This small company, with a total market cap of about 100 million dollars, could easily grow to a 10 billion dollar company in 10 years.

Insmed is not an isolated example of upcoming health care success. In the year 2000, the human genome project was completed three years ahead of schedule and now the entire human gene has been mapped.

The significance of this breakthrough for health care companies cannot be overstated. The mapping of the human gene is to health care companies what the Wright Brothers' first manned flight was to the airline industry. It is almost like someone turned the lights on in a room that was previously dark. This breakthrough has fueled the development of a class of drugs called protein-based drugs that in many ways are far superior to the molecular drugs most of us currently use.

For two reasons, protein-based drugs will become the primary drugs of the future:

  • Protein-based drugs can be developed to target very specific gene deficiencies.
  • Protein-based drugs often have few side effects because they are made from the building blocks of living tissue.

This makes it possible to safely target and precisely treat very specific problem areas of the body, something that is very difficult for a molecular drug. For individuals with specific gene deficiencies that cause disease or other serious health problems, a protein-based drug that can target a gene sequence in a specific organ or group of cells is a vast improvement over what could be accomplished in the past with molecular drugs.

With protein-based drug treatment and genetic screening using the map of the human gene, the genetic makeup of at-risk individuals can be studied and specific drugs can be given to match common genetic problems. Literally, thousands of protein-based drugs can be developed to treat the huge number of genetic diseases that are suffered by humans.

Three additional factors, which are not widely known, make the story even better.

First, the technology revolution has greatly benefited health care companies. Without computers, it would not be possible to keep track of the billions of complex gene sequences that comprise the human genetic code. Right now, computers are being used to create huge databases of genetic code representing millions of individuals with various medical aliments. Health care companies trying to design new drugs or locate specific portions of the genetic code responsible for disease creation screen these databases. Computers are also being used to model new drugs and simulate interaction with proteins in the human body.

The next fact is demand. An aging population will put a huge demand on the health care industry. Over the next 15 years, five hundred million people will start spending 15% to 30% of their annual income on health care. This equates to trillions of dollars per year. The average increase in health care spending for the next 25 years will be almost 15% per year.

Finally, nothing happens without money and developing drugs is expensive. However, no industry gets more consistent venture capital funding than the health care industry.

When you add up all the factors, health care will be one of the best investing opportunities over the next 10 to 20 years.

Happy investing,

Bryan Rundell

Disclaimer: There are no guarantees in investing. I make no assurances regarding
the investment information presented in the Rogue Investing Report.

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