A high probability stock trade with significant upside

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Today’s issue in preview:

• A high probability stock trade with significant upside

• The best and most important economic news you’re not hearing in the mainstream press

• How to trade the world’s hottest market of 2026: An update in our series

• Learn our Top Themes to buy now

A high probability stock trade with significant upside

Credit: Orhan Turan

Over the past two months, the iShares Biotechnology ETF (IBB) is up 17% and recently reached a new all-time high.

This makes IBB one of the world’s top-performing ETFs of the past two months. It also makes our recommendation to invest in this theme a big winner.

On August 18, 2025, I sent a research note to colleagues outlining my bullish view of the biotech sector’s price action. Since then, I’ve written more than a dozen updates on the biotech bull market, as IBB has risen 52%, far outpacing the S&P’s 21% gain.

IBB focuses on large biotech firms such as Amgen (AMGN), Vertex Pharmaceuticals (VRTX), and Gilead Sciences (GILD). The S&P Biotech ETF (XBI), which focuses on smaller biotechs, has risen 86% compared to the S&P’s 21% gain.

The biotechnology sector comprises companies working on cures and treatments for hundreds of diseases. When investors grow interested in this industry, the returns can be incredible. During the last biotech bull market, the sector soared 300% over four years.

Biotech performed poorly from 2021 through 2025, so most investors are indifferent to it. But I see major potential here. This industry is poised to generate many stock market doubles and triples over the coming decade.

The fusion of AI plus biology will generate dozens of compelling stock narratives over the coming years. Researchers running superintelligent AI programs will be able to run millions of digital simulations of drugs and treatments. This will put medical innovation into overdrive… and create many big stock market winners.

Companies that leverage AI to “crack the code” for various diseases, treatments and drugs will enjoy 100%… 500%… even 1,000%+ stock rallies.

In many cases, these rallies will happen thanks to stories and potential… rather than a company generating revenue or earnings.

Capitalizing on many of today’s biggest stock market trends means focusing on promise over profits. The biotech sector holds the potential for both.

Biotech has another powerful factor working in its favor: Virtual anonymity.

The investment public is largely indifferent to the biotech industry right now. Investment newsletter sales related to biotech are tiny. Biotech specialists posting on X get scant attention. CNBC does not have a show devoted to biotech. Presentations on biotechnology stocks are not popular at investment conferences.

If I were to bring up biotech investing to a group of casual, amateur investors, I’d get blank stares in return. To put the situation in blunt, conversational terms, “Nobody gives a s**t” about biotech.

This “state of indifference” is very bullish for biotech stocks.

When the investment public is indifferent towards a powerful theme, it tells you valuations have not been bid up to unrealistic levels… so there’s plenty of room to grow into high valuations. Plus, it means there’s a lot of money on the sidelines that could eventually pile into the trend, sending it much higher.

In other words, “A strong industry uptrend + public indifference towards that industry” is one of the greatest moneymaking equations in all of finance.

Investors with the time to spend on picking individual biotech stocks and managing the positions can generate large returns in a biotech industry uptrend. For example, over the past year, at least 14 companies with “therapeutics” in their names have delivered returns of 300%+ or more.

If you don’t want to spend time researching and managing individual biotech stock positions, ETFs can get you exposure to this industry. XBI and IBB are worth considering.

The biotech industry has tremendous price momentum working in its favor… plus the investment public is largely indifferent to its success. This is a powerful combination that makes more new highs a high-probability bet. I remain bullish on biotech.

The best and most important economic news you’re not hearing in the mainstream press

Credit: IURII KRASILNIKOV

It’s too bad our biology makes us fixate on alarming news, scandals, wars, fights, murders, and disasters.

If that weren’t the case, more people would know that the entire world is in a bull market.

Many people like to blame the mainstream media for fanning the flames of political divides, culture wars, social unrest and other conflicts. But don’t blame the media. The people working at Fox, CNN, ABC, NBC, and CBS have kids and mortgages and cars to pay for, like the rest of us. They are chasing high salaries, bonuses, capital gains, and dividends like the rest of us.

And they know their customers (you and me) like to click on and watch news about wars, crises, murders, political fights, and the like. This desire is seared into our DNA.

Fixating on potential dangers and sources of conflict is a useful survival instinct. A million years ago, it’s how our ancestors survived. Back then, an unusual noise coming from behind a bush could mean a tiger was about to attack.

These days, we don’t need to worry about tiger attacks, but our old survival instincts still dictate our actions. We still fixate on potential dangers. That’s why we are compelled to click on headlines that promise information about war, murder, fights, crises, natural disasters, recessions, and bear markets.

Again, you can blame the media. But it’s just responding to consumer demand.

If this weren’t the case, more people would know that literally the whole world is a bull market. Today, the Vanguard Total World Stock ETF (VT) reached a new all-time high.

VT aims to do what its name implies. It owns over 10,000 stocks to give investors exposure to dozens of countries, dozens of industries, and thousands of different stocks from around the world.

U.S. stocks. European stocks. Asian stocks. Growth stocks. Value stocks. Tech stocks. Mining stocks. Health care stocks. Emerging market stocks. You get it all with VT. For those of you scoring at home, the fund aims to track the FTSE Global All Cap Index.

Does the global economy have imbalances and big problems? Of course. It always does. But making money in stocks is never the result of a problem-free economic environment. It’s always about being in an environment where the big problems are overwhelmed by the even bigger positives.

For stocks around the world, the big positives are strong enough to send VT to all-time highs. The fund is up 23% over the past year. Trends tend to persist, so consider us bullish on stocks worldwide.

How to trade the world’s hottest market of 2026: An update in our series

Credit: KanawatTH

Today, bulls on the “AI infrastructure” trade received some excellent news. The VanEck Semiconductor ETF (SMH) reached its highest point since mid-June.

The status of this critical tech sector has become one of the great sagas of the business and investment world… a source of intense disagreement among industry bulls and bears.

Is this consequential industry group a buy, a sell, or something else?

Today, we update you on this industry’s “trend health” and offer guidance on how to think about and trade this sector. This is the third part of our special series on “the state of semis.”

The semiconductor industry has always been a critical part of our high-tech economy. Semiconductors are the “tiny engines” that power our computers. However, the proliferation of AI has turbocharged the industry’s revenues and stock prices. It has also made industry leader Nvidia (NVDA) a $5.4 trillion colossus. The stock is up more than 1,200 since January 1, 2023.

In June 2025, semiconductor stocks broke out of a sideways consolidation pattern and began a rally for the ages. During this rally, the world’s largest semiconductor ETF – SMH – gained 147% in just under a year.

Individual semiconductor leaders AMD (AMD), Marvell Technology (MRVL), and Lattice Semiconductor (LSCC) gained more than 200% during that time. Stock gains of 25% in a month became commonplace.

When a sector gains 50% in a year, that’s considered incredible. What semis returned was “triple incredible.”

Avid Money & Megatrends readers know what drove those giant returns. Given AI’s enormous promise, large tech firms such as Alphabet (GOOG), Amazon (AMZN), and Microsoft (MSFT) have invested over $1 trillion in AI infrastructure. They are on pace to invest over $700 billion this year alone and more than $3 trillion after that.

Both the scale and the velocity of this investment boom are unprecedented. It is the largest collective investment effort in history.

A lot of this money was used to purchase semiconductors. Semiconductor industry revenue totaled $793 billion in 2025, an increase of 21% year-over-year, according to Gartner, Inc.

Given its AI drivers and big returns, it’s no wonder semis became the world’s “hottest trade.” And when any theme becomes the world’s hottest trade, it becomes a leading candidate to experience a significant correction or something worse.

That’s just how the stock market works. When a bull market grows very popular and attracts a lot of speculation, it likes to “buck off” market participants with a sharp correction or worse.

That’s what has happened to the semiconductor trade this summer. After soaring from June 2025 to June 2026, SMH declined 24%. Some individual semi names declined by more than 35%.

So, what is next for the “world’s hottest” trade?

Let’s size up this trend and make some “trend health” conclusions.

As you can see in the two-year chart below, the SMH share price declined from the mid-$600s to the mid-$500s. But over the past two weeks, SMH has rallied back into the $580s and has recently reached its highest level since June. This rally has erased the worst of July’s selloff.

In my initial trend health analysis of SMH, I stated that if long-term AI bulls are proven right by the market, SMH will likely “digest” its summer losses by trading in a sideways consolidation pattern for 3-6 months… and then recover to trade back to the mid-$600 area and beyond.

If the AI bears are right, SMH won’t see that mid-$600-per-share level for years… and we are much better off focusing on other trends.

Since SMH began selling off in July, I’ve leaned towards thinking SMH’s decline will prove to be a short-term correction inside a long-term bull market. However, I place much more weight on what the market thinks about this trend (and every other trend) than on what anyone else thinks about it, including me.

With all this in mind, traders looking to ride clear, healthy uptrends should see the recent SMH rally as a huge step in the right direction back towards “excellent trend health.” Further gains into the $610 per share area will tell us the semi trend is officially alive and well. Our updates on this all-important trend will continue…

Market Notes

• Our recommendation to invest in the booming oil and gas pipeline industry continues to pay off bigly. Blue chip pipeline firm Energy Transfer (ET) reached a new all-time high today.

• The strong economy continues to express itself via the bull market in Full Service Restaurants (FSR). The Cheesecake Factory (CAKE) and Brinker International (EAT, Chili’s) reached new all-time highs today.

• Mega bank JPMorgan Chase (JPM) reached a new all-time high today. This is a significant bullish economic signal.

• The Power Grid Upgrade theme continues to create winners. Electrical infrastructure giant Eaton (ETN) reached a new all-time high today.

• Drug development giant Charles River Laboratories (CRL) reached a new all-time high today.

Regards,

Brian Hunt
Editor, Money & Megatrends

An urgent message from our colleagues:

Elon Now Pays 15X More Than Your Bank

Elon Musk is now paying you 15X more than your bank… Thanks to a project he’s been working on for the last 27 years. All you have to do is sign up for his new bank. For years, America’s biggest banks have been telling you they have no choice but to pay you interest rates as low as 0.4% (that’s the national average). Now, suddenly… Elon is exposing many of these bankers for the sharks they really are. He’s not offering double… or triple… or even five times the interest… But 15 times the national average – at 6% per year. This is just one of the radical ways Elon’s new bank is disrupting the financial sector…

Luke Lango is revealing how it could impact your money (and how you should prepare) here.