Health Care Stocks Will Continue to Rise

Where will the bulls be next?  HEALTHCARE!  The Health care Sector as a whole is up 10.62% YTD.  Normally this would be considered a great year and might cause investors to believe that profit taking is the next due step.  This is no normal year however, consider the Consumer Discretionary Sector up a whopping 29.78% YTD or the Materials Sector up 32.95% YTD.  The Information Tech. Sector is up 39.93% YTD and even the once hated Financial Sector is up more than the Health care sector at 12.83% YTD.  In the last three months however Health Care has been matching all these other sectors in growth.  Both the Information Tech stocks and the Materials stocks have only beaten Health Care by less than 2%.  This means that these other sectors are not peaking and certainly not forming any large scale reversal (I explain why in this article) but the other sectors are begining to flatten out. If you already have long positions in these sectors this is not bad news but you might consider positioning yourself to catch another huge rise in Health Care. 

This chart shows how the S&P 500 was growing ahead of the Health Care Sector and how recently the health care stocks have caught up with the S&P and will not surpass the general markets performance.

Why will the Health Care Sector continue to grow?  President Obama’s health care ideas are the main reason.  It is not that his plan will benefit companies in this field, in fact it is the opposite.  Obama’s health care reform will probably not have a negative affect on already existing health care giants.  I actually believe that it might end up helping many U.S. Citizens as well as the businesses in the sector.  But many people have been scared by Obama’s policies.  This may be waranted beacuse there is no way to tell how the new reform will affect companies values.  The key is that Obama’s ideas will take a long time to be implemented and have an affect on the market.  It will be years before Congress and the Senate and other parties involved can make decisions and get the ball rolling.  But people’s fears of a negative affect have held back the Health Care Sector.  If you get in now, these stocks will start to rise even more than they have as more and more investors realize that Obama’s plan will not be affecting the markets for a long time and the affect may not even be abad one when it does happen.  The key is that in the short term (perhaps 1 to 12 months) these stocks are heading up!  I will caution that you might be able to get slightly better entry prices if you can play the seasonal dip coming up which is detailed in this article.

Remember that investing is very risky and should only be done with money that you can afford to lose.  The author of this piece is not responsible for any decisions you make after reading this article.