We have held an overweight to the Health Care sector for serveral years. The Health Care Reform bill holding up in the Supreme Court does add a new wrinkle, but the underlying thesis to our position is still positive. An aging world population provides a steady increase in the need for the products & services provided by this sector. Margins may decrease over time, but demand will more than offest this in our opinion. Health Care is also one of the only sectors that have a track record of growth over several decades wtih defensive qualities.
The following is an excerpt of a piece by Dr. Ed Yardini from his Dr. Ed’s blog:
Health care is a big business in the US. It accounts for lots of jobs, and is one of the few industries that have been hiring more workers during the current “jobless” recovery. The government spends a great deal of money providing health care benefits, which have significantly widened the US budget deficit. Health care costs have been rising rapidly. The number of Americans eligible to receive government-funded health care benefits is also rising rapidly. And many more are becoming eligible as the Baby Boomers are starting to retire. Let’s review the underlying statistics behind these trends: