As 2016 has ushered in one the worst stock market performances in recent history, investors and market pundits are assessing the damage. The broad market as measured by the S&P 500 is down 5.8 percent (see table below). The healthcare sector underperformed and was down 8.5 percent. This underperformance is partially due to substantial declines in many Biotech/Pharma issues. The Biotech ETF (IBB) is down a whopping 22.6 percent. Other healthcare companies suffered some pretty steep declines including McKesson, Biogen and Vertex.
On the other hand, among the wreckage, there were a few notable outperformers and some that actually made money during the atrocious start to this year. Edwards Lifesciences, Johnson & Johnson, Stryker and United Health posted gains year-to-date. Issues like Merck and Aetna, while down, still outperformed the SP 500 ETF (SPY) and the healthcare sector ETF (XLV).
Seasoned investors usually use these declines to begin accumulating positions in some of their favorite companies. After all, if you went to a car dealer to buy a new car and the salesman said he’d give you 10 percent off, you’d jump at the opportunity. In the stock market though, people tend to get excited and buy when prices are dramatically higher, and when things go on sale, they lose interest. So if you want to make a long term commitment to Biotech or other quality healthcare issues, the sector is now holding an early Spring sale.
All the best,
|Early Spring Sale & Performance Measures|
|Stock or Index||Ticker||YTD (2/19/16) Price Return|
|Johnson and Johnson||JNJ||1.4|
|S&P 500 ETF||SPY||-5.8|
|Thermo Fisher Scientific||TMO||-8.2|
|S&P Healthcare Sector ETF||XLV||-8.5|
Source: In Sickness and Wealth Research, Bloomberg