My portfolio has plenty of the first two categories. We have a handful of above-average utilities and energy stocks. But we have only one health care play. If you look at other income-focused portfolios, you’ll find a number of health care real estate trusts and pharmaceutical makers.

Now, we’re not unaware that changing demographics in this country and rapidly growing health care costs have made this a powerful sector. But the numbers are all wrong.

On the real estate side, there are still a number of issues concerning what the property should cost. So smart investors have to remain picky when it comes to hospital and retirement home REITs.

But when it comes to pharmaceuticals, we’re dealing with a whole other set of problems.

We have been covering the ongoing “patent cliff” in name-brand drugs for years now. Some $49 billion in annual pharmaceutical sales are at risk of losing their exclusivity.

And for a drug maker, that’s your most important asset…exclusive rights to make and sell your drugs.

This isn’t some far-off problem. Last year, industry leader Pfizer lost exclusive rights to Lipitor. That drug brings in — or, more accurately, brought in — more than $4.5 billion in annual revenues. That’s a sizable chunk of change.

Others have faced similar challenges. Eli Lilly lost exclusivity to Zyprexa — $1.9 billion in yearly sales. GlaxoSmithKline lost Advair — $4.7 billion in U.S. sales. The list goes on and on. There are also plenty of big drug patent expirations on the horizon. In fact, the majority of these problems are yet to come for most major companies.

Now that we are further along on this patent cliff, other potential plays are popping up. There is one company we recently released to our Lifetime Income Report subscribers…

Up until now, we’ve been a bit cautious to get into it, however. Its long and successful history didn’t give it a pass on this patent cliff problem. It was very much in trouble.

However, through all of this, the company still managed to generate $11.4 billion free cash flow and increase its earnings per share for the 28th year. It has been able to do that in face of some of the stiffest economic environments in history and its expiring patent issues.

And, it has ensured continued growth through their proactive portfolio transformations.

What really strikes us about this company’s approach is how, despite its long legacy, it refuses to be a dinosaur. Its current goal is to realize half of its health care revenue from products developed in the last five years. Considering the backward-looking industry it finds itself in, that’s great foresight…

Sincerely,

Jim Nelson
for The Penny Sleuth

A Crack at One of the Fastest-Growing Sectors in the Market was originally featured in the Penny Sleuth.

OLED display screens — short for organic light-emitting diodes — offer far greater energy efficiency, along with brilliant colors and durability.

I’ve seen video clips of mobile OLED screens being smashed with hammers and not looking the worse for wear. A standard LCD screen would shatter into dozens of shards. In addition, OLED allows for transparent and flexible screens, which opens up a new world of possibilities for display technology. CNNMoney’s site lists transparent screens as the big technology breakthrough of 2012, although they got the name of the technology wrong.

The visual aspects of a breakthrough display technology, however, are only part of the story…

Mobile devices bring additional challenges, requiring the application of additional technologies.

Mobile computing devices are, obviously, small. This complicates their use, since there isn’t much room to cram a display and keyboard interface onto them. As a solution to the problem, mobile devices have been dropping mechanical keyboards and moving to touch screens.

Screens are no longer just output devices. They are now input devices as well. Sharing input and output functions in the same physical space means display screens can be larger. That’s easier on the eyes. Touch screens are also easier and more intuitive for many mobile applications compared with toggles and trackballs.

Several types of touch-sensitive displays exist, but the most-popular variety today is known as the capacitive touch screen. A capacitive touch screen includes an insulating layer, like glass, that sits on top of a conducting layer. Current manufacturing techniques use indium tin oxide (ITO) for the conducting layer.

Touch screens allowing multiple simultaneous touches feature a coordinate grid layer of electrodes, which each act as a sensor. Since the human body conducts electricity, when the insulating glass layer is touched, a potential electrical difference is created between the finger (or thumb, as the case may be) and the ITO elements.

This electrical phenomenon acts as a signal that is sent to a microcontroller, which interprets it so it can be used to sense input by a device’s operating system. Microcontroller functions include receiving the raw data, cleaning up background noise, interpreting the size and shape of the touch and calculating the exact coordinates of the touch. Touch has revolutionized the mobile computing market.

So just how big is the touch market? According to Walker Mobile, a mobile display market analysis and information firm, the touch screen market grew from $1.5 billion in annual revenues in 2008 to over $6 billion last year.

DisplaySearch, another market analysis firm, forecasts this market to grow to over $22 billion by 2016.

The market is expanding rapidly, and this year, we also have some near-term catalysts to accelerate the touch screen business.

Microsoft’s Windows 8, for example, will feature increased support for touch screens. Microsoft’s new user interface, called Metro, is specifically designed to use them. I had a chance to demo the Windows reboot at the Consumer Electronics Show earlier in the year. It is a big improvement over Microsoft’s initial attempts to include stylus touch functionality in tablet computers.

With the launch of Windows 8, there will be a wave of new touch-enabled mobile devices at the end of the year. However, we’ll also see touch interfaces accelerate their move into traditional computers.

Intel, always a close Microsoft partner, revealed an Ultrabook reference design that includes the tech. Ultrabooks are a highly portable, high-performance segment of the notebook market that is being promoted by Intel. They are expected to post strong growth within the PC segment over the next few years and will be a huge driver for touch screen technology.

With continuing strong growth in touch-enabled smartphones and tablets, as well as new touch-enabled PCs, there is a huge opportunity for companies in the touch screen business.

The semiconductor industry has been going through a soft patch, but it isn’t expected to be touch-and-go for much longer. With Windows 8, touch-enabled Ultrabooks and flexible touch screens all starting to go live by the end of the year as well, it is a great time to start a position in the touch screen market.

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Penny Sleuth

Nothing Touches This Market… was originally featured in the Penny Sleuth.

If you have been following me here in the Sleuth for awhile you already know that I think one of the best ways to profit from this growth is through small semiconductor companies. But if you have been following this technology, you also know it has been a rough month for this sector.

A number of semiconductor companies have already reported earnings so far this quarter. The general gist is that temporary weakness is holding the sector down in the second quarter of the year.

This has put some downward pressure on share prices over the past month since the run-up from last December’s lows. Apple’s record earnings report, however, snapped the losing streak this week, at least temporarily.

The general consensus, however, is that things will pick up toward the second half of the year. This is generally a busier period of the year for the semiconductor sector, as new consumer electronics are released for the holiday season.

Furthermore, ongoing resolution of the hard drive shortage — caused by last year’s flooding in Thailand — will provide a tail wind for many companies.

Among other tech companies, the current weakness is affecting TriQuint Semiconductor. Although the company reported above expectations for the first quarter, it gave lowered guidance for the second quarter. This is largely due to a slowdown from its largest customer…

You see, TriQuint is a major supplier of RF components for Apple and that Apple guided a weaker second quarter. I think it is fairly easy to see why TriQuint guided lower as well.

I think it’s a good time to look for values among semiconductor companies in anticipation of an improving environment toward the end of this year…

With the accelerating growth in the mobile market and the need for their technology, small semiconductor companies will come out on top… and early investors will be able to take profits in the process.

If you haven’t already, I’d look to add some of these small semiconductor companies to your portfolio.

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Penny Sleuth

Temporary Weakness Sets up Future Returns was originally featured in the Penny Sleuth.

In the 1770s Italian physician and physicist Luigi Galvani shocked the world with the discovery that a spark could cause a dead frog’s legs to twitch.

In 1802, German chemist Johann Wilhelm Ritter furthered Galvani’s research into electrophysiology. He observed how halting a strong current in muscle nerves could cause a muscle to contract.

Electricity as a medical therapy became a high-voltage field of interest. By the late 1800s, scientific literature described how electrical pulses could kill bacteria in river water or change the shape and color of red blood cells. Luminaries, such as Nikola Tesla, pioneered experiments and patented electrotherapeutic equipment.

Although electricity’s effect on the body had long been studied by the middle of the 20th century, many of the mechanisms were not yet known. In the 1950s, however, this began to change. For example, in 1951 Nobel Laureate in physiology or medicine Alan Lloyd Hodgkin theorized that the breakdown of a cell’s “skin” was at the root of many of electricity’s observed effects.

Hodgkin believed cellular membranes were electrically insulating layers, and that strong electricity caused pores to permanently open. Irreversibly opening pores made cells break apart and die. The phenomenon was dubbed electroporation, from the words “electric” and “pore.”

However, more experiments by other researchers eventually showed that irreversible electroporation wasn’t always the outcome of passing electricity through cells. Cellular pores are electrically charged gates. If pulses of electrical energy are sufficiently low and brief, existing gates open only temporarily. These cells don’t die, but this effect can still be useful. With electroporation, the ability of cellular membranes to keep a tight seal to the outside world can be manipulated for short periods of time.

As it turns out, the discovery of reversible electroporation revolutionized biotechnology research. Cracking open a cell’s pores allows researchers to get stuff into cells they weren’t able to before. By the 1980s, thanks to reversible electroporation, researchers were able to modify genes in everything from mouse cells to bacteria.

Today, electroporation equipment is a standard appliance in research labs. These devices, called electroporators, are used to create things like “knockout mice” — organisms with genes modified to study everything from cancer compounds to Alzheimer’s disease. Moreover, many of the new wonder drugs are biologics, which means they are produced by living organisms. Biologics often depend on the use of electroporation to create genetically modified cell lines to manufacture complex therapeutic proteins.

Up until recently electroporation has been limited to the lab. It is something used to introduce molecules that normally won’t be absorbed by cells while in culture. But that has changed…

Today this same technology is being applied for the treatment of cancer in living organisms — humans, to be exact…

You may already be familiar with some of this technology. I’ve been writing about it for some time.

Therapeutic engineered DNA molecules, known as plasmids, are an exciting, maturing platform for treating disease.

Plasmids are small rings of DNA that are used to turn cells into custom protein manufacturing plants. Once introduced into a cell, these genetic code constructs act like native DNA: they guide the production of proteins. This can include therapeutic proteins. The downside of DNA plasmids as agents to cure disease, however, is that they don’t migrate into a cell’s interior very well, if at all.

Electroporation solves the problem of DNA delivery. It has been used for this job in labs for decades. It can increase the ability of molecules like DNA to enter cells by 1,000 times or more.

Electroporation drug delivery can be used for far more than DNA vaccines. It can be used to deliver DNA designed for other purposes, as well as for improving the uptake of therapeutic molecules that are already on the market…

One use of gene therapies involves injecting directly into tumors.

This focuses on writing the code for these naturally occurring anti-cancer agents in its DNA plasmids, and then introduces them into tumor cells via electroporation.

Normally, the immune system works to seek and destroy cells that develop mutations. Sometimes, however, mutated cells develop the ability to defend themselves by hiding from the immune system. Alerting the immune system with these signaling proteins allows the immune system to recognize cancer cells and triggers a cascade reaction to destroy them.

Early investors in the technology will be on track to reap rich rewards from breakthrough electroporation platforms… it addresses a huge market.

Yours for transformational profits,

Patrick Cox
for The Penny Sleuth

An Electrifying Biotechnology – A Shot at Shocking Profits was originally featured in the Penny Sleuth.

In the process, they have done very well.

This sort of investing is not “trading” in the sense that the word is used to describe efforts to beat the market. Traders normally try to anticipate trends and act before the market moves. Trading the channel is the opposite strategy. Those who utilize this technique buy a stock that they would like to own more of after an event pushes a stock down. Channel traders buy for the long run, but often take profits when the stock goes back up.

For that reason, I’ve been talking to some of the other analysts at Agora to devise a strategy to help investors recognize channel trading opportunities. This will probably take the form of a ranking of companies in my portfolio based on my degree of certainty and/or urgency.

Here’s a great example…

I’ve written often about BioTime because of a string of important developments. These developments include the addition of Dr. Andrew von Eschenbach, ex-FDA head and noted cancer fighter, to the BioTime team. His confidence in BioTime’s recently announced pan-cancer diagnostic technology, a simple blood test that could easily replace dozens of separate and expensive tests, has to be seen as an important event.

Similarly, the announcement that BioTime, in conjunction with the Wistar Institute, has cracked the DNA reprogramming code, via the SP100 gene, is huge news. Not only will this discovery give BioTime the ability to safely reprogram cells for use in regenerative medicine, I believe most other stem cell companies will eventually have to pay BioTime for the right to use the technology.

There are other developments in the BioTime stable of subsidiaries as well. Today, however, my interest has been peaked by a blatant short attack on BioTime…

So-called analysts are doing everything they can to paint the company as a hollow shell. While such unscrupulous tactics make life uncomfortable for the executives of the companies under assault, they do provide opportunities for investors to increase holdings.

BioTime is the only stem cell company with a Big Pharma deal, the Teva/Cell Cure Neurosciences collaboration for macular degeneration in Israel. BioTime subsidiaries are also established in Singapore, Shanghai and Hong Kong. Because endothelial precursor therapy would involve a simple transfusion after the cells are prepared, it is a perfect candidate for health tourism.

This is why I believe that BioTime, at current low prices, is a perfect channel trading opportunity.

Yours for transformational profits,

Patrick Cox
for The Penny Sleuth

Finding Your Best Opportunities Right Now was originally featured in the Penny Sleuth.

Revolutions in our understanding of the genome and proteome, however, are opening up new pathways toward vanquishing the cancer foe…

These technologies are maturing and are finally starting to put a dent in the problem. It can take a decade or more to get from the academic lab to the oncologist’s office, but we are beginning to see a harvest in the form of new therapies.

One of the things I love to see in a pre-commercial biotech companies is a drug discovery engine that gives it a competitive advantage. An advantage when it comes to discovering and designing next-generation therapies.

Although the main headlines in drug discovery are lately grabbed by breakthroughs in computer modeling or bioinformatics, all successful drug candidates must also be screened in vivo. That is to say, in living organisms.

A superior computer-based discovery process is a huge advantage when it comes to screening millions of potential compounds. Nevertheless, before moving on to human clinical testing, potential suitability must first be verified in animals.

There are the obvious ethical considerations regarding human testing that the FDA helps enforce. However, the prohibitively high cost of testing in humans also demands that a candidate compound be thoroughly vetted before initiating an expensive clinical trial. Researchers must “check their work” as rigorously as possible before assuming these risks.

Here, the older technology has limitations.

Traditional cancer discovery techniques use implanted tumors in animal models to test potential compounds. However, these tumor cell implants, called xenografts, aren’t adapted to an in vivo setting. They are typically grown in a culture and are therefore adapted to that environment.

In this respect, they aren’t truly representative of a real-life tumor, which develops from a mutated cell in a living organism. This causes cancer researchers to drill a great many “dry wells” in their search for a winning formula — since existing in vivo technology turns up a lot of false positives.

One platform is designed to improve on the limitations of the existing technology. It is built upon the revolution in genomics that has enabled researchers to map genetic mutations unique to cancer cells in order to target them.

In addition, advances in genetic engineering now allow researchers to develop custom cell lines that express the same molecular targets as the cancers they want to treat.

It uses mouse stem cells into which cancer-causing gene mutations are inserted. These stem cells are then injected into mouse embryos alongside healthy cells. The chimeric embryos are then implanted into mice, creating a line of custom-made animal models that develop cancers expressing the same cancer targets researchers want to hit.

Unlike tumor xenografts, these tumors are more similar to those that occur in real life, since they form spontaneously in the body. Normal tumor interactions with surrounding tissues are preserved.

Not only that, they also express a genetic variation that is more like what exists in tumors that form naturally in humans.

Since the genetic variation more accurately models what goes on in the real world, it helps identify why some tumors of a specific cancer type respond to a therapy while others do not…

This is important, since resistance to therapy can vary widely from patient to patient, even if the cancer is of the same type.

Companies working towards new ways of discovering drug compounds will maintain the competitive edge in their field. Dilution is the usual downside of investing in pre-commercial biotech companies. Not yet profitable, they need to raise capital to continue funding operations.

However, before you put your money into a small, pre-commercial biotechnology company, you want to make sure they have a something no one else is offering…

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Penny Sleuth

Superior Biotechnology Leads to Superior Drugs was originally featured in the Penny Sleuth.

Today’s computers owe their success to early breakthroughs in semiconductor technology that allowed circuits to store data compactly in the form of bits. These bits of data, stored as tiny electrical charges, are like tiny switches. They can be either on or off. These two states correspond to “1” or “0,” which allows computer designers to build logic circuits using binary math.

Everything we do with computers — from reading this article on a mobile device to solving the world’s toughest problems on supercomputers — is ultimately broken down to a series of 1 and 0 bits in the innards of a computer.

A modern computer, even a relatively modest one, is built out of billions of these tiny switches.

Thanks to increasing miniaturization, we can cram more and more of those little bit-holding electronic elements into a circuit, and we can do it cheaper as well. This steady improvement, first described by Intel co-founder Gordon Moore, has driven up performance and driven down costs.

Just as early breakthroughs in traditional computing technology enabled today’s generation of digital computers, new breakthroughs in quantum computing will change the game again.

Quantum computers, which use quantum mechanics to perform computations, use quantum bits to store data, rather than bits. Also called qubits, these units of data storage can assume more than two states. In fact, unlike the tiny switches present in binary electronic computers, a qubit can assume a vast number of different states.

A practical quantum computer would enable computing power beyond anything we’ve ever seen. In theory, a quantum computer composed out of only a few hundred working qubits could contain more data than there are atoms in the universe. A binary bit computer, even with trillions of traditional bits, wouldn’t stand a chance.

It strains the imagination to consider what kind of computing applications quantum computing could enable. At the very least, difficult computational problems that consume vast computing resources in scientific research could become far more tractable. More-accurate weather forecasting, superior modeling for engineering applications and better simulations of how the body functions would prove transformational in their respective fields.

If we learned how to make quantum computing inexpensive and accessible to the average person, super-secure communications and true natural language recognition would be possible. Quantum circuits could perhaps enable artificially intelligent machines that would relieve humans of the drudgery and danger of many different kinds of work.

Recently, a small Canadian company is moving the quantum ball forward in a big way. D-Wave Systems Canada, specializes in making quantum computing a reality. It has, in fact, already sold commercial systems to defense contractor Lockheed Martin as well as Google.

The company’s technology is based on superconducting adiabatic quantum processors. Quantum mechanics allows electrical current in a superconducting loop to be both “1” and “0” at the same time.

Without getting into too many details, this technology allows D-Wave to get around existing technological limitations that come from trying to use individual subatomic particles to perform computational functions. D-Wave’s qubit elements can be manufactured at scales current technology can handle.

Earlier this year, a D-Wave quantum computer composed of 84 qubits was used to solve an extraordinarily difficult math problem: the calculation of a Ramsey number. The 84-qubit quantum computer used 28 qubits for actual computation and the other 56 for error corrections.

Ramsey numbers give the solution to what is known as the “party problem.” The problem sounds simple enough: How many people do you need to invite to a party so that so that a defined group of them (m) know each other but another defined group (n) do not? The number is usually expressed as R(m,n).

Although the problem sounds simple, it is actually incredibly difficult to calculate as m and n scale up. Hungarian mathematician Paul Erdős once famously said that if an alien force threatened us with invasion unless we provided the solution to R(5,5), we should put all of our computers and mathematicians to work on it immediately. If, however, they asked for R(6,6), we should prepare for war. If we used conventional computers to solve the problem through brute force calculation, the amount of years needed would start with a 1 and be followed by 250 zeros.

D-Wave has had plenty of naysayers over the years claim it doesn’t have a working quantum computer.

So how well did D-Wave’s quantum computer do?

The 84-qubit computer solved the Ramsey number problem for R(8,2) in 270 milliseconds with only 24 qubits actually working on the problem.

These impressive results are only the beginning of the quantum computing revolution. This will lead to computers that will be smaller and faster than you can imagine. Pioneers such as D-Wave (and their earliest investors) stand to share the biggest rewards…

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Penny Sleuth

The Anatomy of a Supercomputer was originally featured in the Penny Sleuth.

Grandfather is 82 now, and it is difficult to look at the strong, healthy man I remember from my childhood sitting in a hospital bed crisscrossed with tubes and wires. The doctor said he was lucky. The heart attack wasn’t severe enough to cause real damage and hospital tests revealed the true extent of the disease. He’ll be undergoing a quadruple bypass surgery.

Cardiovascular disease is the No. 1 killer in developed nations like the U.S. More than 600,000 people die of heart disease in the US alone. More than one million people suffer a heart attack. Worldwide, the number swells to 22 million.

For the survivors, living with a damaged heart becomes their day-to-day reality. For those needing heart transplants, the waiting lists are long. Even when a recipient does receive a transplant, it is from a foreign donor, and a lifelong course of immunosuppressant therapy is needed so that they don’t reject the organ. The health care costs associated with heart disease are vast.

What will the world be like when we can reboot aging hearts and arteries, restoring them to youthful health? An interesting question, isn’t it?

Well, we may be able to do this sooner than you think… maybe even in the next six months…

My colleague Patrick Cox and I personally toured its labs of BioTime recently to view these developments firsthand. I was just an observer — but Patrick was a lab rat!

BioTime received some of Patrick’s cells in order to demonstrate how it can transform them into stem cells used to rejuvenate the cardiovascular system.

The technology is astonishing to witness firsthand. When it goes live, all that will be necessary to get the process started from a patient’s perspective is a few minutes at a dermatologist’s office.

We visited a dermatologist near BioTime’s headquarters, where a small bit of Patrick’s skin was removed from under his arm. The physician gingerly placed it into a flask and packed it into a Styrofoam cooler for transport to BioTime’s lab:

Skin cells in hand, we drove to BioTime, located just a few minutes away. BioTime’s CEO, Dr. Michael West, explained that skin cells are more durable and ready to propagate in culture than other cell types. This makes them easier to work with. As the head of one of the world’s leading regenerative medicine companies, Dr. West is immersed in the science of stem cells.

When we arrived at the lab, Dr. West donned a white lab coat to prepare to work some magic on Patrick’s cells. He teased out cells from between the collagen fibers that form part of skin’s structure and bathed them in a growth medium prior to placement inside of an incubator.

Once enough new cells have grown in culture, Dr. West’s labs can transform them into stem cells. His company has pioneered in the discovery of how to flip the genetic switches needed to perform the conversion. Dr. West has also developed the technology to lengthen the telomeres in adult cells.

Not only will these cells be able to turn into any type of tissue in the body, they will also be biologically young.

In six months, the cells taken from underneath Patrick’s arm will be transformed into his heart cells. If successful, the cells produced will be the building blocks for his heart. These stem cells could then be used to repair damage and make his heart more youthful.

The great thing about these stem cells is they are not embryonic but have the same youthful properties. That means they have all of the healing potential that stem cells offer — with none of the controversy. It’s hard to see how anyone could stand in the way of such a promising development…

As biotechnology investors we can not ignore the importance of stem cell breakthroughs. They will change the world, and early investors will earn historic returns.

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Penny Sleuth

How to Reboot an Aging Heart was originally featured in the Penny Sleuth.

Crocs — the company behind those ugly, squishy sandals — was having a banner year in 2007. The stock was booming. At one point, sales projections forecast that every man, woman and child in the country would soon own several pairs of Crocs sandals. The share price doubled. Then it doubled again.

That’s when reality set in…

Following a parabolic ascent that lasted nearly a year, Crocs shares tumbled. After all, it turns out there actually is a limit to how many plastic sandals a company can sell. From a high of $75, the stock plummeted to less than $1.25 in about 11 months.

Today, if you swap out neon shoes for iPhones, you can see the writing on the wall. Apple’s spectacular run is all but over.

Unfortunately, most investors won’t know what’s coming until it’s too late. Just this week, an analyst from Topeka Capital Markets slapped a $1,000 price target on Apple stock. That would value the company at just a little more than $1 trillion.

In reality, Apple will never hit the $1 trillion milestone. In fact, this scenario is downright impossible. If you own shares of Apple, you should sell them immediately. If you’re thinking of buying now, don’t.

Apple is headed for a painful and inevitable correction. And when Apple finally implodes, the destructive ripples will reach beyond dazed shareholders. In fact, an Apple crash could have a far-reaching effect on the tech sector, the Nasdaq, and even the market at-large.

Sleuth correspondent Chris Mayer detailed several fundamental concerns regarding Apple in his column less than one month ago. Chris questions the sustainability of iPhone subsidies, growing competition from Android products, and the loss of visionary leader Steve Jobs. In my opinion, these are all valid concerns.

But none of these fundamental arguments matter anymore. Forget everything you’ve read about Apple. Forget about its growth prospects, sales numbers, and international expansion. What you have to understand is that Apple Inc. has effectively severed itself from Apple stock. Nothing the company says or does will have any effect on how this scenario will end. Apple is now at the point of no return. The stock has entered the beginning stages of an epic meltdown.

Here’s how Apple’s final moments in the spotlight will play out:

The first step toward its downfall is an abrupt change in how the stock trades. This is already happening. Apple has gone from outperforming the market every year to outperforming stocks nearly every single day. The trend has accelerated. The stock has spent very little time consolidating its big move. Any way you look at it, Apple’s recent run-up is unsustainable. The chart has gone hyperbolic — a sure sign that a correction is imminent.

This brings us to step two in the process: Wall Street analysts swooping in with outrageous price predictions. Topeka Capital has already posted its $1,000 call. In the coming days and weeks, you should expect the bizarre game of “analyst leapfrog” to begin. The drones covering Apple stock will re-evaluate their numbers. Analysts will increase their estimates.

Investors will greet the higher price targets with enthusiasm. Just like neon plastic shoes, iPhones and iPads will be bought and re-bought by every person on the planet. The investing public will gush over its paper gains and repeat the famous bag-holder mantra:

This time, it’s different…

Only it’s not different. History will continue to repeat. That brings us to step three. I call it the “first crack.”

Consider the following: Right now, Apple is the most valuable public company in the world. It is the most widely owned stock among hedge funds. The stock has enjoyed a tremendous, decade-long bull run. Every armchair investor in the country has bought shares. In short, no one is left to buy into the story anymore.

That’s where the first crack comes into play. All it will take is one small warning. iPad sales might miss expectations. Or consumers might not like the new Apple TV that’s set to debut sometime this year. Just one sign of weakness will trigger the first selloff.

Hedge funds will sell first, creating a powerful initial drop. Average investors will shrug it off. Analysts will immediately defend the stock. They will insist that the drop has created a buying opportunity. But by that time, it will be too late.

Once the meltdown begins, there’s no way to stop it.

As the big money players unwind positions, the stock will develop the first signs of a massive downtrend. At that point, too many investors will be underwater. The floodgates will open. Apple will go from Wall Street’s darling to a complete outcast in a matter of weeks…

If you just take a step back from the noise, you can see why the $1 trillion milestone wont’ happen. Remember, this exact same scenario has played out time and again throughout every sector and asset class on the market. No matter how strong the underlying company might be, its stock cannot overcome a dangerous, parabolic chart like we’re seeing in Apple right now.

Investors have already banked the easy money. Don’t get burned fighting for the scraps.

Sincerely,

Greg Guenthner
for The Penny Sleuth

Apple is Doomed: What Analysts Aren’t Telling You was originally featured in the Penny Sleuth.

Many of us leave our metaphorical hearts in San Francisco, but this conference is about saving our literal hearts, along with other non-optional body parts, from the ravages of aging. I heard from speakers describing the latest advances in life-extension technology.

This includes, of course, my friend and Sleuth contributor, Patrick Cox.

Life extension will create huge new markets. Life itself isn’t just another product like a computer or an automobile. Eventually, we’ll all buy enough gadgets and baubles. The human desire for healthy, quality life, however, appears inexhaustible.

From past Chinese emperors seeking the elixir of life to Spanish conquistadors in search of fabled fountains of youth, we’ve been searching. Modern science is finally answering the questions of why we age and die, and discovering the means to prevent it.

Patrick’s presentation was exciting. He talked about everything from rejuvenating stem cell therapies to a promising new plant-based nutraceutical for “inflammaging.” He also talked about a fruit-derived compound that promises to fulfill the life-extending promise resveratrol couldn’t.

I love telling you about how breakthrough drug discovery technology is helping researchers design new life-preserving molecules, as well as the money you can make from investing in it.

However, the truth is that “from scratch” drug molecules aren’t the only way we are going to improve treatment for age-related disease. We’ve barely seen what is available in the plant kingdom. There is a nearly bottomless reserve of potentially important compounds made by nature coming on tap.

The very same technologies used for designing drugs from scratch are also unlocking the potential of these existing phytochemicals. As you know, new extraction technology is making enormous reserves of oil and natural gas newly available. When it comes to potential drug reserves in the dizzying variety of plants in the world, new biotechnology will be the equivalent of fracking or deep-ocean drilling.

One of the new medicines Patrick talked about was actually discovered after an expedition to collect rare plants growing on remote mountaintops. I think that’s pretty sweet. It is a plant sugar that reverses liver scarring and drops the defensive shields cancer cells use to protect themselves from the immune system.

One of the nice things about plant compounds — from the perspective of an innovative company — is that they are often regulated differently by the FDA. If the FDA treats them as a food, the regulatory bar for receiving clearance to market them is far lower than for a typical drug.

This creates profitable opportunities for investors on the lookout…

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Penny Sleuth

The Science Behind the “Fountain of Youth” was originally featured in the Penny Sleuth.