Why should I subscribe to In Sickness and Wealth?
The healthcare sector has been one of the most exciting sectors in recent memory. Although there will be certain risks, the future holds great promise for healthcare investors because of three major catalysts: 1) With the passage of the Affordable Care Act (Obamacare), millions of citizens in the United States will now have access to health care that previously didn’t. Thus certain companies will benefit from this landmark legislation. 2) Demographics. As a society experiencing the aging of the baby boomers, we are getting older as a nation. As we age, health generally deteriorates. This need for medical care, pharmaceuticals, and long term health care will substantially increase. 3) The advances in science and medicine are accelerating at a substantial rate. A disease that proved fatal years ago, might now have new treatment protocols and therapies. Some diseases now have cures. And wearable devices are available to monitor and track diseases and activities to promote wellness. As this “perfect storm” in health care gathers, we think there is great opportunity for investors. It represents investment in meaningful outcomes – to humanity and our economy – treating disease and saving lives!
The team at In Sickness and Wealth has an extensive background in science, medicine and in the investment markets. Our 50 years of combined experience encompasses hospitals, laboratories, research facilities as well as trading and being immersed in the institutional and retail investment world. When you combine science and medical knowledge with investment acumen, you have exceptional opportunities at your disposal. We have done well in the field and in our healthcare investments; our goal is to educate and bring others into this great field through the investment process.
Are there any particular risks to investing in one sector?
While this publication will deal exclusively with the healthcare sector, a few things come to mind. First – NEVER, NEVER, NEVER invest all your assets in one sector. Prudent investment requires diversifying along many companies, in several industries, and also in fixed income and alternative investments too (e.g. Commodities, real estate, and others). We just happened to do better investing in healthcare than in any other sector of our economy. We identify strongly with Peter Lynch’s philosophy of investing in what you know.
Will In Sickness and Wealth also discuss healthcare investments outside the United States?
Yes. While we in the United States have some of the most awesome scientists in the world and hundreds of great healthcare companies worth considering for investments, we do not hold exclusivity on innovation and brilliance. Novartis and Roche are two great companies that have had an immense impact on medicine and healthcare. Both are headquartered in Switzerland.
Traveling internationally for decades, brought quick realization that famed investor T Rowe Price’s fertile fields indeed exist beyond U.S. borders across the oceans.
What if I am unhappy with my subscription to In Sickness and Wealth.
Write us and tell us and we will refund the remaining portion of your subscription. We want 100 percent satisfaction among our readers. If you are not learning and not finding adequate opportunities for your capital, then we haven’t done our job.
Is there a potential conflict of interest given that you own stocks and talk about positions that you own in various issues of In Sickness and Wealth.
All personal holdings will be disclosed with each issue and updated on our website. Most holdings were purchased long ago and are mostly in large cap blue chip companies. As there are very few people on this planet who can move a stock like Johnson and Johnson over the short term with a recommendation (it’s a $250 billion market cap stock), even with a healthy ego it would be foolish to think we and our subscribers could move a mega cap stock like JNJ. It is our hope that buying innovative, financially sound companies and holding them for long periods of time, will yield the greatest results. We have neither the temerity nor the intestinal fortitude to consistently trade in and out of positions each and every day.
What, if any, particular style of investing do you employ in the personal portfolio—are you a growth investor? A value investor? Momentum investor? Do you use fundamental and/or technical analysis in choosing investments?
We will utilize all available tools for investing. If a compelling value investment comes to the forefront, we will take a close look. If we see an exciting growth story, we also will consider it. We like situations where technical analysis lines up with fundamentals although they are not mutually required to pull the trigger on an investment. In general we favor large and midcap companies that exhibit high returns on equity (high teens and greater) and steady growth characteristics in terms of revenue, profits, cash flow and dividends. We will, for example, make exceptions and consider a high growth company that has a no dividend policy if we see the company taking those profits and reinvesting in the company for future growth. Illumina Corp would be an example.
What about risk and risk management?
In each company we analyze and discuss, we will consider the risks and the rewards. With Big Pharma, there have been incredible success stories and large profits have been made over the years. But those profits didn’t come without risk. Generally, the larger the returns, the larger the risk. Anyone that held Tetraphase in September of 2015 can attest to this. When its key drug (and one that investors pinned their hopes and Tetraphase’s future on) failed in a clinical trial, panicked investors beat this stock down far greater than the usual 25-50% in this situation. In fact Tetraphase was eviscerated and fell from 40 to under 10 overnight after the announcement.
What is your time horizon or holding period for an investment?
Our website contains an educational section where one of the content features is a time-tested strategy called “The Coffee Can Portfolio.” It was first reported in the Journal of Portfolio Management by Robert Kirby, who then worked at Capital Group. It’s a throwback to the old days when people stored valuables in a coffee can and stored them away for “safe keeping.” The contents of the coffee can were not to be touched unless absolutely necessary. Warren Buffett is one of the great practitioners of this strategy, as he will often invest in a stock and hold it for decades. Several of his holdings throughout his investing career were held for 25 or more years. While many have tried to debunk the buy and hold school of thinking, it works for many people.
In Sickness and Wealth will try and emulate this strategy and hold for longer time horizons. However, we will not hesitate to sell ANY investment where our original thesis or business case no longer holds true. If the fundamentals or the business landscape change, we will not hesitate to sell a particular holding. But as a general rule, we like to hold an investment for at least 3-5 years and some holdings have remained in the portfolio for 20 years. There are three great advantages to holding for the long haul:
- Far lower transaction costs such as commissions and bid-offer spreads
- Far lower tax burdens
- Dividends and growth of dividend payouts
Truly great businesses usually continue to be great and thus held for longer periods.
You seem to emphasize investing in common stocks of healthcare companies. Do you ever consider bonds or other fixed income investments in this space?
If there is investment merit we would consider investing in fixed income securities of healthcare companies. One must consider the ability to meet interest payments, credit risk and general interest rate risk. In the current environment (late 2015), interest rates are at historical lows. Given that bond prices move inversely with interest rates, any significant move up in rates would decimate bond prices and cause serious loss of capital to the investor.
Does anything keep you awake at night regarding the overall healthcare landscape?
Yes! CONGRESS!! In all seriousness, the payer vs. provider debate will certainly heat up in the years to come. We will make every attempt to keep you on top of this crucial topic.
What is the price of a subscription and what do I stand to gain?
The cost of an annual subscription is $199.00. We have a simple mantra:
Subscribe/Learn—The Healthcare industry is about $2 trillion in size. Does your investment portfolio reflect the importance of this sector?
Invest/Earn—we will challenge readers at all levels—beginners and advanced investors—to question strategies, identify risks and understand the interdependencies of what drives the success or failure of a company and its stock price (solid product/pipeline, responsible and effective management, and strong cash flows and balance sheets).
Empower/Return—better knowledge leads you to better decisions. Whether it is your investments or healthcare choices, use the information to create a better life for your family, and a more secure retirement. Investments in healthcare pay great dividends financially and for humanity in terms of treatments and cures. A wise person once said, “first we learn, then we earn and then we return.” After a lifetime of learning and then earning, we will feature various stories about how we “return” or give back to society.
Moreover, In Sickness and Wealth will give back to the healthcare industry by donating a portion of its profits to excellent medical causes and to those that support venture philanthropy in the healthcare field.
And finally, we look to our readers for input—feel free to send us your questions and comments.