Last year, health care stocks kept investors hale and hearty. Ironically, some bad news was good news for these issues.
As the economy softens, companies and consumers might spend less on technology, hurting tech companies’ profits, but people are still going to get sick and require health care. Therefore, these stocks are considered a safe harbor: a defensive play for investors when the economy cools off. In addition, biotechnology stocks soared after news of the completion of the Human Genome Project made headlines.
Going forward, biotech still looks exciting. In 1997, only 10 of these companies were making money; now it’s about 20 and, by 2002, 50 could be profitable. In a few years, 100 or more new drugs might be approved each year, up from 40 or 50 per year today.
Picking individual biotech stocks is chancy so you may be better off in a well-regarded sector fund such as Vanguard Health Care Fund and Eaton Vance Worldwide Health Sciences Fund.
