Healthcare Making New Highs

The healthcare sector still looks strong. Investors have begun digesting the consequences of the Affordable Care Act that the Supreme Court just upheld.

The consequences of this act won’t be fully understood for some time but two things are clear: first, there’ll be winners and losers as policy changes work through the system. Second, healthcare services will continue to be in high demand for many years to come. That has nothing to do with Obamacare. It comes from the simple fact that America is aging. The Baby Boomers, our nation’s largest and most powerful generation, will be requiring advanced medical care for many years to come.

This near-constant demand for healthcare creates a permanent bid for the industry. You can see in the chart below how the SPDR Health Care Sector ETF (XLV) held up better than the S&P500 during the most recent selloff.

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From May 1, the S&P500 fell 10%. Yet, the Healthcare Sector (XLV) was down just 6%. After recovering, the S&P500 is still 3.5% below its recent highs. Yet XLV has already broken out and is making new highs.

I’m expecting outperformance of the healthcare sector to continue for some time and will keep searching for the best investment opportunities.

If you haven’t done so already read the Survive & Prosper issue on “Do You Keep Your Cash in Underperforming Money Market Accounts?”.

 

 

Adam O’Dell

Using his perfect blend of technical and fundamental analysis, Adam uncovers investment opportunities that return the maximum profit with minimum risk.