Tech-Free Friday: The Other Side of Health Care
With this column, we introduce David Pyrce, who manages Bear Creek Capital Partners II, L.P., a Southern California-based hedge fund specializing in all sectors of health care. He was once a health care equity analyst with Van Kasper & Co., a San Francisco-Based investment bank, and before that, held various management positions in the health care industry. As always,
let us know what you think.
Spreading the Eggs Around
But despite the challenges, investing a portion of your portfolio in the consistently growing health care sector (more about that growth in part two) makes sense. And, if we have learned anything from the "tech wreck," it's not to put all of our eggs in one basket. Health care represents a little less than 20% of GDP
, so it makes sense to put at least a portion of your investments in health care stocks. More important, diversify within health care by splitting your investment across the four primary health care segments: pharmaceuticals, biotechs, medical products and health care services. If you think you're smart enough to pick the hot group, forget it, you're not: Those boring drug stocks, as represented by the Amex Pharmaceutical Index, or DRG, were up a whopping 164% from January 1996 to January 1999, while the Amex Biotech Index, or BTK, was up only 47%. | American Stock Exchange Biotechnology Index |
| |
More Than Two Choices
Here comes what just might be a revelation to many: Health care investing does not need to be a schizophrenic dichotomy between just drug and biotech stocks. As I mentioned above, the health care sector is typically broken out in pharmaceuticals, biotechnology, health care services and medical products. Just look at performance for the health care service group, as represented by the Morgan Stanley Health Care Provider Index, or RXH. This group includes stocks such as Tenet Health Care (THC Quote), Lincare Holdings (LNCR Quote) and Healthsouth (HRC Quote). It was up an impressive 88% last year, with a one-year return from March 1, 2000, to March 1, 2001, of 109%. The medical products group, as represented by the Morgan Stanley Health Care Products Index, includes companies such as Baxter International (BAX Quote), Cardinal Health (CAH Quote) and Medtronic (MDT Quote). They were up 30% last year, with a 21% return from March 1, 2000, to March 1, 2001. Just imagine, making money investing in health care without a drug or biotech stock in sight, and you don't even have to worry about the differences between a fully humanized antibody, a murine antibody or a chimeric antibody. Good, solid performance out of boring, predictable health care stocks. Sexy? Not really. Exciting? Perhaps not. Profitable? Very likely. Let's get down to specifics in Part 2.- Loading Comments...
- Loading Comments...
Recent Comments
Featured Photo Galleries
| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
|---|---|---|---|---|
| 10,388.90 | 1,105.98 | 2,194.35 | 34.83 |
Oil *
77.74
|
|
UP
22.75
|
UP
6.06
|
UP
21.21
|
UP
1.03
|
10 Yr
3.48%
SPDR Gold
113.75
|
|
+0.22%
|
+0.55%
|
+0.98%
|
+3.05%
|
Data delayed 20 minutes |














