Although healthcare industry has been a safe investment option for many investors looking for stability in growth rate, particularly in times of great volatility in the markets, reports from 2018 according to analysts following up with the industry are showcasing red flags that might indicate that healthcare industry is ready to take a downward turn in 2019.
Healthcare industry rocked the S&P 500 list, dominating the market during 2018, however, due to regulatory concerns regarding Affordable Care Act, some of the biggest players of the industry are showing double-digit losses, indicating that 2019 might be a troublesome year even for healthcare as it progresses with Q2.
Is Investing in Healthcare Industry Profitable in 2019?
The ruling that made Affordable Care Act unconstitutional seems to have taken the healthcare industry to a less stable path in the market as one of the biggest and largest exchange-traded fund, the Health Care Select Sector SPDR Fund (XLV) have recorded double-digit losses with the beginning of December 2018, while other companies, such as Tenet Healthcare Corp, are also marking losses in the market.
The regulatory uncertainty seems to be sending the healthcare stocks to a downward path in addition t having a growing deficit in the government budget, which also contributes to the negative outcome in the market as the deficit is affecting the healthcare sector as well.
In the past, outperformance in the healthcare sector on S&P 500 has usually led to underperformance based on the previous historical trends, which is why analysts consider that the healthcare industry is in for another downward spin in the upcoming period, at least in oppose to other sectors on S&P 500 index.
However, market watchers are implying that this might be the right time for investors to take part in the industry’s stocks by investing in healthcare while in a dip.