Health Care Stocks Dominate Under ACA

The Affordable Care Act (ACA) obviously changes how the government interacts with the private sector to support a healthy, thriving society. And under the new policy, there’ll be winners and losers.

On the consumer side, some will pay more (young folks) and some will pay less (older folks).

On the servicer side, the new law will benefit some companies and hurt others. And unfortunately, there are still too many unknowns for us to determine which companies win and which lose.

Regardless, the health care sector will play an ever-increasing role in our economy as baby boomers age and require more products and services from providers.

As such, health care stocks have perked up over the past four years.

Since March 23, 2010 — the day President Obama signed the ACA into law — the health care sector (XLV) has gained 75%, eclipsing the S&P 500’s gain of 54%.

Since June 2012 — when the U.S. Supreme Court upheld the ACA — health care stocks have performed stronger than all other sectors, beating the S&P 500’s advance by more than 50%.

And since October 1, 2013 — when open enrollment in the Health Insurance Marketplace began — health care stocks have gained 12%, while the S&P 500 is up less than 7%.

Even during the recent broad market selloff from the January 15 peak, health care stocks have stayed on top.

Here’s a chart that shows 72% of health care stocks are still trading above their 50-day average. That’s more than any other sector, besides utilities, which always seems to rise to the top when investors are overly defensive.

See larger image

Investing in the health care sector is generally beneficial on both sides of the coin. When the market is down, health care stocks generally lose less ground than other sectors. When the market is up, health care stocks have proven they can generate stronger gains than other sectors.

The lesson to learn is simple: One way to beat the market — whether it’s up or down — is to invest in the healthiest and strongest sectors, instead of buying a broad market index fund.

And that’s exactly what I do with Cycle 9 Alert, the VIP research and trading service I developed in 2012.

At the end of last month, I recommended a specific health care investment and it’s already handing subscribers an open gain of more than 25%.

If passive, buy-and-hold index investing isn’t doing it for you… click here to learn a better way to reach your financial goals.

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Categories: Health Care

About Author

Adam O'Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.