Healthcare is 7.3% of the US stock market.
That’s just off the lowest the sector has been in thirty years.
The sectors weight is lower than it was at the top of the dot-com bubble, back when everyone with a pulse was buying pets.com and nobody wanted to own a drug company.
The weight has halved since 2022. It’s been through 12 straight months of outflows.
This is in large part because its gains simply haven’t kept up with the hotshot stocks crowding it out.
And there has been some ugly price action. UnitedHealth is down about 40%, one of its worst runs since the 1980s. Pfizer has been in the doldrums for a while.
The headlines have been taking care of the rest: drug prices pegged to overseas levels, tariff threats on pharma running as high as 200%, and the ongoing noise about Medicare and Medicaid.
And feeling may come from the top and spread down, handicapping an entire sector, revenue moves the other way. It arrives bottom-up, one company at a time, one quarter at a time.
It is a sector where there are amazing fundamentals sitting at discounted rates, and that are showing price charts which have nothing to envy of some of the market's more popular stocks.
We have seen this movie in the past, which is why playing it again today makes everything quite clear.
When the dot-com bubble broke in March 2000, the money went to the place it had ignored during the mania.
Over the two years that followed, the S&P Healthcare index rose about 30% while the S&P 500 fell about 16%.
When the line goes up on the chart, healthcare is doing better than the rest of the index. When the line goes down, it’s doing worse.
It was the same setup exactly: a market crowded into one story until the valuations snapped, and a defensive sector left for dead that became the hiding place thereafter.
Authors note: We are already at hundreds (!!) of paying members of Babylon Burns, the turnout has been wonderful and we’re just getting started.
This report includes 5 amazing healthcare stocks, including one which could seriously re-rate which very few people are taking seriously.
If you join Babylon Burns today, you get to enjoy our $299 discounted price instead of the $399 full price which you’ll have to pay if you wait until after our launch period is over.
If the pick above pays off, a small investment in the stock alone would more than pay for your subscription. If for whatever reason this one doesn’t work out, we have you covered with plenty of ideas.
We initiated these 5 positions in the Babylon Burns portfolio on Monday, and they are all trending this week.
These and all the portfolio are yours when you join today. Monday we published our energy picks, Tuesday our senior housing picks, Wednesday our rearmament picks, and tomorrow will be the oddballs that fit nowhere.
