Yes, like the ever-growing demand for energy, the need for more (and better) healthcare is only going to expand in the future. The world’s population is not only getting bigger, but we’re living longer despite becoming less and less healthy during those longer lives.
Annually, health care in the United States is a $2 trillion industry, and is projected to grow at a pace of about 6% per year for at least the next five years. That’s not to say the sector’s top companies will only be able to grow at that rate, however. Through attrition of their competition and greater economies of scale, the healthcare industry’s top players are poised for reliable double-digit growth. The advent of Obamacare will ultimately fan those flames, even if the impending law shakes down those who would have otherwise skipped buying insurance. The Health Care SPDR (XLV) is the easy way to take on a piece of this trend.
Top industry in the healthcare sector: Biotech
Fifteen years ago, biotech companies were high-risk, fringe investments. Today, biotech is the new pharmaceutical industry. The advent of genome sequencing will soon give biotech developers not just new knowledge, but will also provide tools to develop brand new kinds and categories of drugs. That being said, betting the farm on a one-trick pony — a biotech company that only has one drug in the pipeline — is still a dumb idea. Look for a company with a large library of biopharmaceuticals and a history of successful new drug development. Biogen Idec (BIIB) comes to mind.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.