Why Are Health Care Companies Good Investments Today?

Why Are Health Care Companies
Good Investments Today?
By www.ProfitableInvestingTips.com

http://profitableinvestingtips.com/stock-investing-tips/why-are-health-care-companies-good-investments-today
As the bull market continues to age,
many investors are re-balancing their
investment portfolios.

Some are buying bonds as a way to invest
without losing any money.

These folks are willing to accept safety
in return for giving up the opportunity
for more profits if the market keeps
going up.

Others are staying in the market but
looking for safe investment niches.

One such relatively safe investment
niche is health care.

Why are health care companies good
investments today?

Signs That a Correction Is
Getting Closer

Stock traders watch the market for
technical signals and long term
investors look at stock fundamentals.

But, sometimes the proof is right in front of
us in our everyday lives.

An old friend of mine, a native of the
country of Panama, tells a story.

His father was a farmer and an observer
of nature as well as human nature.

He said that a person did not have to
read the business pages to know if
there was a recession on the way.

All that was necessary was to look at the
mango trees in the park across from the
church on a Sunday morning.

When times are good, no one bothers
to climb the trees in the park to pick
the mango fruit.

But, when there is less work and less
money in everyone’s pockets, the mango
trees are picked bare because people need
to eat.

You do not have to live in Panama and
look at mango trees.

When another mall closes in your town it is
not necessarily because of bad
management.

People are simply buying less. And, the
result is that weaker businesses fail,
followed by the next weaker, and their
employees start looking for work, and
taking jobs that pay less.

What Will People Still Buy
When Times Are Difficult?

Health care companies are good
investments today and always because
people need their products and will
buy them even when they cannot afford
an IPod or need to cancel their Netflix
subscription.

Market Watch writes that the market is
due for a hard landing and suggests
health care companies as a safer investment
option today.

Over the past 10 years it has not paid
to be cautious.

Low interest rates drove prices of almost
all assets higher.

Pricier assets made people feel
wealthier and thus magically created
economic growth.

Low interest rates also pushed people into
riskier assets, thus creating a mismatch
between the assets people hold and their
true risk affordability and appetite.

What is clear is that since interest
rates are low and global economies
are highly leveraged, central banks
and governments will not have as
much power to help.

This is one reason why my firm’s
portfolio holds a lot of healthcare
stocks.

Healthcare companies have great balance
sheets; their business is not cyclical (the
demand for its products doesn’t fluctuate
with the whims of the global economy);
and there is a huge tailwind behind their
backs in the form of the aging global
population.

Moreover, many of these stocks trade
at highly attractive valuations.

Health care companies are not all the
same. United Health Care is a health
insurance company.

Pfizer is a big pharmaceutical company that
sells lots of medications that people need.

Medtronic makes cardiac pacemakers
and other equipment needed for health
care.

Johnson & Johnson sells everything from
Band-Aids to advanced prescription
medications.

Johnson & Johnson was also
mentioned in our article about
investing without losing money.

They and Microsoft are the only two US
companies with AAA rated corporate
bonds.

Health care companies are good
investments today because they are not
overpriced and have huge margins of
safety with strong brand name
products that will still sell when the
economy weakens and the stock
market corrects.

Why Are Health Care Companies Good Investments Today?

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Why Are Health Care Companies Good Investments Today?