"This is where money goes to die," has described one sector
over the past decade but this year, things are different.
That industry is health care and for the first time since
1988, it leads the S&P with a 12 percent gain-the most among
the 10 main groups. Specifically, health insurers, biotechnology
companies and drug makers.
) is up 9.5 percent this year. Eli Lilly (NYSE:
) is up more than 12 percent, Amgen (NASDAQ:
)-up eight percent, and St. Jude Medical (NYSE:
), up nearly 16 percent. The big winner is Celgene (NASDAQ:
)-up nearly 40 percent since the beginning of the year.
But to measure a sector, looking at the
will provide another glimpse as investors look for confirmation.
The SPDR Health Care Services ETF (NYSE:
) is up 11 percent, the iShares Dow Jones US Pharmaceuticals
) is up nearly 10 percent, and the iShares Nasdaq Biotechnology
) is up more than 10 percent.
Convinced? As hard as it is to believe it, it's true. The last
time the industry lead the S&P, it finished the year up 42
percent compared with gains in the S&P of 27 percent.
Analyst consensus, according to
, is that S&P health care companies will climb 8.4 percent
this year compared to growth of only 0.9 percent in 2012.
What's the deal with health care? Why such gains? First,
you can thank Obama, according to industry insiders. Regardless
of the political opinions, the facts are that a lot of people who
didn't have healthcare are about to enter the marketplace-in
fact, up to 48.6 million are about to become new customers.
Second, there might be some sector rotation in the mix. While
the broad market bull has been on a run, it left health care
stocks behind. Now, the sector is catching up and if that's the
case, there's still room to run.
Before diving in, there's room for caution. First, traders
know that playing biotech stocks can feel like a day at the
casino. Just because Celgene is up doesn't mean that all of the
biotechs are a buy. One bad FDA ruling can slash half of their
value or more overnight.
Next, if investors assume that some of this rally is due to
sector rotation, that means that at some point, there will be a
rotation back out. In the words of the most interesting man
alive, "stay nimble, my friends."
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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