Health Care and Your Investment Portfolio
By Saghir Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)
Health care makes up roughly 18% of the U.S economy and expected to grow 5.6% per year through 2025. In fact, experts anticipate ongoing expansion in this sector no matter what happens with the broader economy-thanks at least in part to the millions of aging baby boomers.
“One of the things we jokingly say about health care is whether or not there’s recession, people still sneeze”.
When financial advisors look at investing decisions, they often start with health care stocks. About 14.5% of the S&P 500 index, which is often used as a proxy for the overall stock market, is health care companies. Within that 14.5%, the biggest sub industries are drug makers, biotech companies, medical device manufacturers, and managed care companies.
Well Fargo investment institute Wells Fargo Investment Institute now recommends that investors overweight their portfolios in the health care sector, that’s because an aging population is a major factor driving growth in the sector. But there are still unknowns. One of the big ones is what might happen in Washington.
An adaptable sector: “In opinion, the Affordable Care Act definitely created some headwinds the way it was written, noting the law increased fees and taxes on some health care companies. At the same time, it also expanded the number of people with health insurance, which in turn can mean higher sales of drugs, medical devices, and medical services. In the time since it was enacted, however, insurance companies and other health companies have adapted to the new health care’s far, efforts to "repeal and replace" the Affordable Care Act in Congress have been unsuccessful, but there is still plenty of talk in Washington about making changes to-or eliminating entirely-the law. "Just the idea of something happening without a concrete direction or actual plan creates uncertainty,”. "Uncertainty is one of the biggest things the market doesn't like."
Other legislation in Washington, though, could be a boon for some segments of the health care economy. For instance, if tax reforms encouraged companies to repatriate dollars from overseas-perhaps through temporary lower tax rates on those earnings-it could spark more mergers and acquisitions among biotech, pharmaceutical, and medical device companies.
Investment opportunities: Health care is often seen as a defensive investment. J perhaps a good place to consider regardless of market and economic conditions.
After all, people still get sick no matter what the economy
Is doing. While health care is a large and diverse sector, not every investment is appropriate for all people.
"Investing in biotech would not be a very good idea for a very conservative, income-oriented investor, “Biotech firms tend to be a lot more speculative in nature than your more established large pharmaceutical companies."
Health care investment opportunities can also help meet other portfolio goals, such as international exposure. "There are a lot of companies with good research efforts and good products that are based outside the United States,"
"It tends to be a little bit more focused in the pharmaceutical and biotech area."
In H.C, you have great opportunity to invest in big companies such as Johnson and Johnson, merc, Pfizer and many others. In Addition to that few other companies in health care sector, most of these falls into category of blue chip, which means for long term these are good solid investments. However, if you are an investor who wants to speculate, you will look into biotech. Once again you have large numbers of companies to choose from, these are need establishment emphasis that falls into the bio tech and they would be good solid investments. However, somewhat aggressive investments are speculating. In addition to that there are young new biotech companies that have recently emerged. You should be extremely careful investing in these new companies because if they only have limited numbers of Drugs, you could end up having larger percentage of your investments. In these types of companies, you only invest the money that you can afford to lose. My suggestion is to only invest in the new companies as I have already written above that they have big speculative and you can end up losing up to 90% of your funds. This means that it will take your many years to make up this loss but what I normally do I try to invest in 1st group of companies that I have shared with you. If I have some solid proof that the Drugs now company is working on, it should be improved that I might take a chance and invest small amount. No more than 1% of my total portfolio.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
-----------------------------------------------------------------------------
