Market analysts often describe health care as one of the four defensive pillars of the stock market, alongside utilities, consumer stocks and telecoms. However, the sector’s performance in the last few weeks has been anything but defensive.
The Dow Jones Industrial Average plunged by almost 200 points placing the blame on the problems facing the Deutsche Bank but what was most intriguing was the fact that it was health care that showed the worst performance with a decline of 1.8%.
Does this mean health care shares lack some level of safety? Well, not exactly, although the group has become riskier than it used to be. Health care is still a strong investment option despite its current dismal performance. One bad stretch doesn’t necessarily mean health care is a bad investment. To get a better understanding of health stocks let’s take a look at what it means to invest in health care.
The health care sector is comprised of different industries ranging from pharmaceuticals and medical devices to hospitals and insurers. For instance, the aesthetic and plastic surgery field of medicine has always been quite lucrative for both doctors and investors. The key is to identify secure investment opportunities backed by well known and highly professional plastic surgeons such as Dr. Raffi Hovsepian. He is renowned in Southern California as the best aesthetic, plastic and reconstructive surgeon.
Hovsepian is also recognized as the only physician in the country to treat breast implant illness, or BII, using the En-Bloc treatment procedure. His vision is to provide the best possible care and treatment using innovative plastic surgery advancements.
Investing in health care requires a multifaceted approach and a deep understanding of
the industry’s drivers. For instance, as an investor, you can opt to invest in the overall health care sector or simply invest in other industries, such as sports, entertainment, or igaming industry. It is, however, important to know the key differences among various industries and the metrics you need to follow before you even think of making an investment.
When looking for the best health care company in which to invest, take the time to understand some of the prevalent trends in the industry. These trends can have significant implications in the overall health care sector. There are both positive and negative trends. Positive trends include the baby boomers and the aging population, people with chronic diseases living longer, obesity, diabetes and other lifestyle illnesses, advances in technology, personalized medicine and a global reach of diseases once thought to be exclusive to distant parts of the world. Negative trends include a system run by a single payer which is the government or Medicare, health expenditure being an increasing share of GDP, cost controls and a growing number of the uninsured. These are just some of the many factors that affect health care investments either positively or negatively.
Health care stock investments have a good potential for generous returns, but you should always be aware that there are many factors that affect stock prices in this sector. Fortunately, the health care sector is so vast that you can never fall short of both large and small companies in which to invest. You have a wide choice ranging from pharmaceuticals, medical devices and hospitals to health insurance providers and many more industries.
To make things easier, there are many investment vehicles such as ETFs and mutual funds in health care in which you can invest. These are relatively safer options as they provide reduced volatility from placing all your investment in individual stocks and help you to diversify your holdings. So regardless of its current performance, health care is still a great investment option.
Start a free seven-day trial of Premium Membership to GuruFocus.
