I am new to stock market subs. What caught my attention is healthcare stocks are rarely discussed. I am surprised because unlike other industries:
- Healthcare companies announce product sales and regional sales numbers
- Healthcare companies clearly state if there is competition or not
- Easier to forecast because both Patent expiry date and pipeline are public information
What I like about healthcare market at large:
- Healthcare is one of three defensive industries according to Morningstar. Others are Utilities and Consumer Defensive. Utilities almost always underperform the market. For Consumer Defensive, there are huge barriers to entry. Bluechips in Beverages or Tobacco are hard to challenge. In bear market I am going to buy Utilities and Consumer Defensive; otherwise I chase Healthcare for defensive stocks and stability in my portfolio.
- The reason I go for healthcare stocks is that they possess protected downside with upside potential. It is hard to quantify the “upside.” I try to ask healthcare professional friends of mine about the drugs.
- Another reason that I go for HC is its historical performance compared to other costs. I am sure most of you are familiar with Moore's law. Please also check Eroom's Law (that is opposite of Moore's) which applies to healthcare industry. There are countless articles about the increase in healthcare spending despite technological advancement over years. Bad news for citizens, good for investors.
- In my experience, the biggest issue in healthcare market is Litigation. Most common cause is copycats. If you can avoid this risk; then, the possibility of Merger and Acquisition is quite common and really exciting along with growth potential.
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