At minimum you could provide some fundamental information backing your thesis that healthcare stocks are in a bubble and the bottom is going to fall out of the sector. Maybe an evaluation of the current P/E of XLV and where it stands historically and its standard deviation. We have regularly seen bear pundits chiming in that the market or a sector is going to come down hard -- they just don't know when. Is it next week, next year, 10 years, or 20 years for now? Winning the market in terms of investing or trading means doing a proper evaluation of information and having some concept of when the downturn will occur and why. In the meantime a defensive sector which has a 5 year beta of .64 compared to the market and has outperformed the market year-to-date is likely to continue to outperform the S&P 500 if the broader market continues to slide.
I did. A $0.21 piece of gauze for $21. With millions upon millions of boomers only getting older, and the availability of medical treatments that will keep them getting even older and older, the amount of dollars spent will reach levels heretofore unseen. Now that may sound like a great thing, top line revenue increasing is great for every company right? Wrong. Not in this case. Those revenues are paid by Medicaire and private insurance. As their outlays increase year after year, they will force the various sub-sectors in healthcare to cut their prices. $10 for an aspirin can't continue. It's no different than the defense sector charging $100 for a $2 screw. You mentioned a beta of .64. Yeah, that sounds about right, but that is meaningless with regards to the PE of the sector. The entire industry could drop 25% overnight and guess what, when the dust settles, it will still have a beta of .64. So in the context of whether the sector is overpriced or not, your referencing that has nothing to do with anything. Yes, all things being equal, the sector is "safe" compared to the greater market moves. But so is the auto industry that has traded at PE's of less than 10 for 50 years. You can believe whatever you want, but I'm telling you what's going to happen. I'm not going down the GWB debate rabbit-hole, because you will go on and on and on. So save your time and Baron's server space. Just know however... water always seeks its level, and no sector is immune to that. Case closed.
Selling a $0.21 piece of gauze for $21 is actually a case the industry has great margins. No sign that healthcare spending is slowing down, nor is there any indication that margins are under pressure. The sole area where a fuss is being made about prices is pharma — and if the U.S. regulations force drug prices to drop they will still remain higher in the U.S. then most other western countries.
A different opinion (at least about one company): https://www.investors.com/etfs-and-...sure-you-should-buy-these-10-stocks-right-now