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Health Care Stocks: Performance Plus Value

NEW YORK (TheStreet) -- With Obamacare set to take hold in 2014, is it any surprise health care continues to be one of the top performing sectors in the market?

Of the 60 sectors I track with my Best Stocks Now app, four of the top 10 are currently healthcare related. I rank them on short-term, intermediate-term, and long-term performance.

Data from Best Stocks Now App

I have been heavily weighted in the drug, biotech, and health care sectors for over one year and I continue to reap the benefits from them.

I have also noticed lately that as this current seven-month old uptrend in the market gets longer and longer in the tooth, the leadership in the market continues to get more narrow.

The once, red-hot building and construction sector has cooled off considerably and has fallen from its leadership perch. Although I have cashed in on most of the profits I was able to garner from this sector from earlier in the year, I still believe the housing sector is in the early innings of a multi-year rebound. In other words, this sector will eventually come back into favor once again.


Stocks, sectors and asset classes fall in and out of favor during the cycles the market goes through, and I am a big believer in rolling with those cycles as opposed to fighting them.

Just look at the huge difference in the performance of domestic stocks vs. foreign stocks so far this year. While the home-grown S&P 500 is up about 15% year-to-date, emerging markets (as seen by the Vanguard MSCI Emerging Markets (VWO)) are down over 8%, and China is down over 12%.

How important is it to be out of foreign stocks this year? By contrast, how important is it to be in the right asset classes in the market? For this reason I am not a big believer in asset allocation. Why would I want to have any exposure to a bond market that is perched on the edge of a cliff right now? Have you looked at a chart of the bond market lately?

If you haven't, here is a three-year chart of U.S. Treasuries:

What happens when the Federal Reserve pulls its bid for Treasuries? Will China and individual investors be there to continue financing burgeoning U.S. debt? I don't want to be around in the bond market to find out. For this reason, I currently have no exposure to bonds at Gunderson Capital Management.

If your adviser still has you in foreign stocks and bonds, you may want to have a discussion with him or her -- I would want to know why.

Small-cap domestic stocks have especially been one of the sweet spots of the market this year. Of the 35 asset classes that I rank on a daily basis, small cap domestic continues to dominate the top spots.

Data from Best Stocks Now App

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