I have been looking at health funds such as FSPHX (Fidelity) and
others. They all seem to be doing well and track record also seems
good. Can this continue because we are all getting older. What am I
missing here ?.
L
Nothing. They are must for any portfolio.
Howdy L,
You're very close. Health is normally a defensive sector, but when all
the major markets are doing well, a rising tide lifts all boats, what.
Now for the sermon.
There are 75M baby boomers in this country, with countless also in
europe and asia, ex-japan. They were born between 1946 and 1964 and so
the eldest is almost 60. This is a HUGE demograhpic bulge and while a
lot has been written on its impact, many things are pretty easy to spot
and predict.
For example, what do you think they will want to spend their money on
when they retire and get older? Good health, leisure, financial
services, media/telecommunications. These seem pretty much a given.
Well, why not invest in these sectors? Cripes, the oldest boomer won't
hit 85 for another 25 years and the youngest for ~45. However, their
major retirement spending will occur somewhere inbetween - say in the
10-30 year range.
Well, for my money, I don't know how the overall market will do as they
start retiring en mass and drawing down their investments - some say
flat, some say crash, some say no problem. Well, I AM going to invest
some of my dollars in the above 4 sectors and let the boomers do their
thing.
best,
rono
L wrote:
> I have been looking at health funds such as FSPHX (Fidelity) and
> others. They all seem to be doing well and track record also seems
> good. Can this continue because we are all getting older. What am I
> missing here ?.
> L
L wrote:
> I have been looking at health funds such as FSPHX (Fidelity) and
> others. They all seem to be doing well and track record also seems
> good. Can this continue because we are all getting older. What am I
> missing here ?.
Political risk.
Eventually we may get a President and a Congress who will try to enact
universal health care, maybe even a single-payer system; maybe even
stricter price controls on pharmaceuticals. And the effect on health
care and pharma companies may be severe.
Take a look at what happened to FSPHX in 1992-1993, when the Clintons
tried to enact universal health care coverage. FSPHX declined sharply,
by some 50%. After Hillary's health care scheme collapsed, FSPHX
recovered. If Hillary had succeeded, I'm sure FSPHX would have
continued to underperform the S&P 500.
--
Steven D. Litvintchouk
Email:
Remove the NOSPAM before replying to me.
"Steven L." <> wrote in message
news:1G8hf.180$
>L wrote:
>
>> I have been looking at health funds such as FSPHX (Fidelity) and others.
>> They all seem to be doing well and track record also seems good. Can
>> this continue because we are all getting older. What am I missing here
>> ?.
>
> Political risk.
>
> Eventually we may get a President and a Congress who will try to enact
> universal health care, maybe even a single-payer system; maybe even
> stricter price controls on pharmaceuticals. And the effect on health care
> and pharma companies may be severe.
>
> Take a look at what happened to FSPHX in 1992-1993, when the Clintons
> tried to enact universal health care coverage. FSPHX declined sharply, by
> some 50%. After Hillary's health care scheme collapsed, FSPHX recovered.
> If Hillary had succeeded, I'm sure FSPHX would have continued to
> underperform the S&P 500.
>
>
> --
> Steven D. Litvintchouk
Don't forget that once the first waive of the Boomers turn 65--by 2014--over
60% of all health insurance claim dollars will be through Medicare.
With healthcare, you have 3 large industries:
1) Insurance...subject to nationalization and/or aging populations
2) Providers...hospitals, clinics, etc..., potentially subject to price
freezes.
3) Rx companies...also potentially subject to price freezes.
Also...just because a company's top line is growing, their costs may be
growing faster...which means lower profits and slumping stock prices.
D