Skip to footer

Ebola outbreak is not an investing opportunity

As the Ebola outbreak in West Africa worsens, stocks for pharmaceutical companies working on treatments are being batted around Wall Street as potentially hot properties. But trading Ebola stocks is a bad idea. 

|
Salvatore Di Nolfi/Keystone/AP
Director General of the World Health Organization, WHO, China's Margaret Chan and Assistant Director General for Health Security Keiji Fukuda of the US, right, share a word during a press conference after an emergency meeting about the Ebola outbreak at the headquarters of the WHO in Geneva, Switzerland, Friday, Aug. 8, 2014. Duff warns that investors looking for stock opportunities in the Ebola outbreak should proceed with caution.

Want to know the best Ebola trade? Do nothing. The fast money got in on Friday and Monday. And so far, this isn't an opportunity or a scare.

The few pharma tickers I heard going around within the Wall Street sewing circles were TKMR, BCRX and SRPT, as they were the companies working on vaccines, drugs and other treatments for Ebola.

Wall Street has heard of Ebola for a few years now — unlike SARS and bird flu, which were new to our ears. And sadly it seems it's also the difference between Third World vs. Developed World.

If I was still on a trading desk, I wouldn't be trading Ebola stocks — I would be making lists. The last thing you want to do when news breaks is try to find the right stocks to trade. Back when I was a health-care trader and the SARS virus had the world's attention, we broke down every sector to see how it could be impacted. And these opportunities were not just confined to drug makers and medical-supply companies. The virus had the potential to seriously affect the airlines, tourism, restaurants, air-filter companies, quarantine centers. You could cast the net as wide as you wanted.

If you get a phone call this week of someone pitching you an Ebola stock — most likely the guy pitching it is long and wants to get out. There's no real trade yet.

I wonder if any hedge-fund managers considered sending an employee down to scout out Emory University Hospital. They could befriend a couple of nurses at the cafeteria and maybe steal a patient chart or two. Most likely this will be a blip on the radar and we'll file it away, but the second scenario is what you need to be prepared for.

The course of development for a normal drug sometimes spans years or decades. There's discovery, pre-clinical trials, three phases and willing patients to be tested. Not quite the case with Ebola. So they need to go another route, which is the "Animal Rule." It allows companies and the government to develop countermeasures to medical problems before they exist. This isn't like diabetes where we have hundreds of thousands of willing patients lining up to try an experimental drug.

In my opinion there's not much to do other than make a list with different scenarios and be ready if and when. Wall Street is on alert, but it's not time to do anything yet.

Commentary by Turney Duff, a former trader at the hedge fund Galleon Group. Duff chronicled the spectacular rise and fall of his career on Wall Street in the book, "The Buy Side." The paperback edition comes out June 17 and Sony bought the TV/movie rights to the book. Duff is currently working on his second book, a Wall Street novel. Follow him on Twitter@turneyduff.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.
editor@csmonitor.com
Subscribe
Mark Sappenfield
Editor

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

Subscribe to insightful journalism

QR Code to Ebola outbreak is not an investing opportunity
Read this article in
https://www.csmonitor.com/Business/Latest-News-Wires/2014/0808/Ebola-outbreak-is-not-an-investing-opportunity
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe