Diversified healthcare over high-flying biotech
The thesis presented suggests favoring diversified healthcare ETFs over individual high-flying biotech stocks that have already experienced massive run-ups.
The argument
A speaker argued that rather than chasing individual names like Moderna, which has surged off its lows, a more reasonable approach is to focus on diversified ETFs like XLV. This provides exposure to both pharma and discounted managed care names like UnitedHealth at reasonable multiples.
The thesis, stress-tested
✓ What validates it
- ✓Earnings stabilization and multiple expansion in managed care names like UnitedHealth
- ✓Inflows into diversified healthcare ETFs relative to pure-play biotech
▸ Risks discussed
- ▸Regulatory pressure on managed care and drug pricing
- ▸Underperformance of defensive sectors if tech growth reaccelerates
Hear it yourself
"We're gonna talk more about that. I I, at some point, think that sets up quite nicely. But to me, this is a story about the week that health care was front and center. Industrials were front and center. It's less to me about the angst that we have. There's no question markets have been involved since the Fed chair, changed, and that shouldn't be a huge surprise because I think we still are not entirely sure where this Fed is leaning. Yeah. You know, a lot of volatility since the new Fed chair, but in all fairness, also yields have declined double digits since Kevin Warsh became the Fed chair."
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