[Charts] Roasting Shorts and the Fake-Brain Boom

Dear Wall Street Daily Reader,

If you think the GameStop Corp. (GME) saga only involves a small handful of heavily-shorted stocks, think again…

As Bespoke Investment Group noted last week, pretty much every heavily-shorted stock in the Russell 3000 with a nose-bleed valuation is surging.

Take a look:

Avg Price to sales

For any of you who own stocks that are heavily shorted and super expensive, expect to see your profits keep climbing.

But please don’t mistake that statement as an endorsement to own garbage stocks like GameStop.

To the contrary, as I told you earlier, you should be adding them to your “Stocks to Short Watchlist,” not your long investment portfolio.

But I know what some of you will ask next:

“So Lou, if we shouldn’t be focusing on buying or short-selling those stocks right now, where should we be investing?”

Glad you asked:

In short, I recommend you bet on “fake brains.”

Let me explain…

As Business Insider Intelligence reports, “AI [Artificial Intelligence] is the most disruptive technology in pharma.”

Preach it!

You see, by harnessing the power of AI, drug companies can slash the time and cost associated with drug development — and therefore, they can save more lives sooner.

And of course, mint a lot of profits while they’re doing so.

To be clear, I’m not putting profits over people here…

I’m just keeping focused on what you come here to read about. And that’s actionable investment ideas.

With that in mind, I’m convinced a big opportunity is brewing for everyday investors in small-cap AI drug discovery platforms.

Especially since, as you can see in the chart below, a disparity exists among big pharma companies and their commitment and investment in AI.

AI R&D

Simply put, many mega-cap pharma companies need to play catch up in a big way. And the fastest way to do so is to innovate through — you guessed it — acquiring promising AI startups.

Now, I’ve made no bones about my bullishness for biotech investments in 2021.

That’s why biotech is where I’m allocating the largest percentage of my personal portfolio.

If you’re diving in on your own, here’s what I recommend…

Find small-cap companies with AI-based drug discovery platforms.

I’m convinced these small companies will be on the receiving end of big takeover offers in 2021.

Of course, there’s much more to identifying winning biotechs than just small caps with AI-based drug discovery platforms…

In fact I have a whole 7-step system for identifying the biggest biotech breakouts.

We’ll talk more about it soon…

Ahead of the tape,

Lou Basenese

Lou Basenese
Editor and Founder, Trend Trader Daily

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Louis Basenese

Louis Basenese is a professional investor, and one of the country’s leading technology analysts.

He’s spent the past 20 years analyzing emerging technologies, and developing a proven methodology to consistently profit from them.

Lou began his investment career at Morgan Stanley, where he was eventually tasked with directing over $1.5 billion in capital.

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