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Post by chang on May 25, 2021 12:05:06 GMT
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Post by anitya on May 25, 2021 18:59:50 GMT
chang, Just want to make sure my last post does not come across as a downer on HC sector. I hope the following answers your questions more directly. HC as a sector is the least expensive right now (relative to its own history). Seasonality (May - Oct) favors HC (and consumer staples), which means that of all the sectors, you are least likely to lose money and most likely to make gains in HC during this period. My last post was more in the theme of trying to simplifying my portfolio and limit specialized bets (explore and not buy and hold) to 5% of the portfolio. Right now, HC sector bet alone exceeds more than 5% of my portfolio. A
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Post by anitya on Jun 1, 2021 22:28:47 GMT
Does anybody have an explanation why HC sector got hit today?
e.g., IHI dropped 2.4+%, XLV 1.6+%.
Reflation trade is still working. Do not tell me investors are selling HC to buy energy.
I sold PFE I bought a few months ago when it was on sale and rolled the proceeds into CQQQ, which was hot today.
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Post by win1177 on Jun 1, 2021 22:44:14 GMT
Does anybody have an explanation why HC sector got hit today? e.g., IHI dropped 2.4+%, XLV 1.6+%. Reflation trade is still working. Do not tell me investors are selling HC to buy energy. I sold PFE I bought a few months ago when it was on sale and rolled the proceeds into CQQQ, which was hot today. Don’t know why the whole sector sold off, but Abbott was hit HARD as their management reduced expectations going forward, as Covid 19 comes under control over the next year. ABT sells A LOT of testing supplies/ medical equipment/ etc. used for everything related to Covid 19. This includes testing, outpatient supplies, hospital supplies, etc. ABT sold off 10.86%, so I imagine this affected many other health care stocks. It’s now down to the low $100’s per share, slightly above “fair value” (per Morningstar). I’m a long term ABT holder, and placed a “low ball” order in case it continues to drop. Win
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Post by acksurf on Jun 1, 2021 23:26:56 GMT
Yeah, Thermo Fisher got walloped too. I agree positive developments in COVID may be affecting TMO and ABT in particular. Haven't looked into other stocks in IHI. Be interesting to see whether diagnostics is driving the decline or whether there are other factors.
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Post by retiredat48 on Jun 2, 2021 0:01:13 GMT
I have a very large core position in healthcare...held with Fido since fund inception decades ago.
However, to me there are two possible red flags I try to keep an eye on:
1) The progressives are very anti-healthcare companies--anyone making a profit. Been rather silent lately on this front, as Biden et al been very quiet so far. Not sure how long this will last. I think they want to get past Covid before tackling healthcare. But for many progressives, gvt run healthcare still the desire or goal.
2) I have posted often that I view capitalism is great except for one field--healthcare. People just consider it abhorrent that companies may "profit" off the backs of sick people. Ditto somewhat for drug companies and their pricing. They have a point.
Capitalism is usually a voluntary choice by consumers. Healthcare is mostly not voluntary...people often have no choice but to go to hospitals and/or get surgery. And the retail pricing here is outrageous for many reasons.
I view the country would vote to have universal gvt run healthcare, if given the chance. Or at least the trend is in this direction, with young adults being so socialistic. Every day, old folks (capitalists) die, being replaced by untested socialists.
I recall being in Canada talking with some twenty-somethings about their welfare systems and gvt healthcare. Their position was: "I only want gvt to provide healthcare; otherwise it would bankrupt me. Take away all other forms of welfare; I can do without. But need healthcare."
So I tread very cautiously owning healthcare.
R48
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Post by anitya on Jun 2, 2021 6:12:45 GMT
I have a very large core position in healthcare...held with Fido since fund inception decades ago. However, to me there are two possible red flags I try to keep an eye on: 1) The progressives are very anti-healthcare companies--anyone making a profit. Been rather silent lately on this front, as Biden et al been very quiet so far. Not sure how long this will last. I think they want to get past Covid before tackling healthcare. But for many progressives, gvt run healthcare still the desire or goal. 2) I have posted often that I view capitalism is great except for one field--healthcare. People just consider it abhorrent that companies may "profit" off the backs of sick people. Ditto somewhat for drug companies and their pricing. They have a point. Capitalism is usually a voluntary choice by consumers. Healthcare is mostly not voluntary...people often have no choice but to go to hospitals and/or get surgery. And the retail pricing here is outrageous for many reasons. I view the country would vote to have universal gvt run healthcare, if given the chance. Or at least the trend is in this direction, with young adults being so socialistic. Every day, old folks (capitalists) die, being replaced by untested socialists. I recall being in Canada talking with some twenty-somethings about their welfare systems and gvt healthcare. Their position was: "I only want gvt to provide healthcare; otherwise it would bankrupt me. Take away all other forms of welfare; I can do without. But need healthcare." So I tread very cautiously owning healthcare. R48 When you say Universal Govt run Healthcare, I presume you mean only the insurance part of the healthcare. I can not imagine any other part of healthcare will be allowed to be run by the Govt. Currently, all health insurance companies are allowed only a limited profit - they are regulated like utilities. There is no economies of scale with each state having its own set of regulations for insurance companies and the massive red tape at the insurance companies. I am not on Medicare but people who are on it seem to be pretty happy. Insurance companies will not die out if Govt takes over health insurance - insurance companies can still manage large employer plans as they do now and will still be able to write insurance for things not covered by Govt insurance or for doctors who will not take Govt insurance. We can also get rid of the ACA exchanges and the bureaucracy surrounding it. We also do not need that many insurance co executives. Status quo has become a drag on our economy and is impairing innovation and entrepreneurship in other parts of the economy because too many capable people take the safety of working for a big company to get free health insurance which is currently very expensive.
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Post by chang on Jun 2, 2021 6:31:32 GMT
When you say Universal Govt run Healthcare, I presume you mean only the insurance part of the healthcare. I can not imagine any other part of healthcare will be allowed to be run by the Govt. Currently, all health insurance companies are allowed only a limited profit - they are regulated like utilities....... Not disagreeing with anybody, but it makes me wonder why FSPHX's top three holdings are health insurance companies? fundresearch.fidelity.com/mutual-funds/view-all/316390301
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Post by Chahta on Jun 2, 2021 11:27:15 GMT
Because that is where the money is made.
Cigna gross profit for the quarter ending March 31, 2021 was $32.966B, a 9.35% increase year-over-year. Cigna gross profit for the twelve months ending March 31, 2021 was $130.510B, a 6.48% increase year-over-year. Cigna annual gross profit for 2020 was $127.691B, a 4.03% increase from 2019. Cigna annual gross profit for 2019 was $122.747B, a 481.13% increase from 2018. Cigna annual gross profit for 2018 was $21.122B, a 27.68% increase from 2017.
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Post by chang on Jun 2, 2021 12:40:22 GMT
Wow, how did Cigna increase its profit sixfold in 2019?
Notwithstanding these numbers, is the forward-looking picture as rosy for HC insurers? If their profits are regulated ... or if HC insurance is nationalized? The fund managers must not be too concerned, otherwise they would be backing away.
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Post by yogibearbull on Jun 2, 2021 13:04:50 GMT
Medicare Advantage [MA/Part C] is Medicare contracted out to private insurers. Almost 40% of people covered by Medicare now have Medicare Advantage and most insurers are involved. I read somewhere that instead of getting paid a block rate and do/not-do whatever, Medicare Advantage pays by incidents/interactions/treatments. For a while, under the Covid lockdown, people were not going to doctors and that meant MA-insurers were not getting paid*. That is one explanation why we are bombarded with calls by UNH, our MA-insurer, about this or that but we ignore those. It is funny that they mail a huge plan booklet/guide and then call to go over it - I decline by saying I can read, thank you.
*Unlike auto insurers who had profit windfalls and returned pittance on pressure from state regulators and complaints from customers (including mine).
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Post by fishingrod on Jun 2, 2021 13:31:11 GMT
"Rather than lower premiums, insurers searched for other ways to come into compliance. Initially, there were efforts to relabel some administrative costs as “quality improvements”—like lobbying to count spending on nurses’ hotlines as part of the 80 percent. But the easiest route to meeting the requirement was simply to let medical claims increase. That companies opted to do this, instead of lowering premiums, didn’t come as a surprise to the authors. “An instrument like this looked very familiar to me from my work on utility regulation,” Cicala said. “And it was kind of incredible that something like it had been adopted [by the ACA].” The electricity sector, for instance, uses regulations similar to the 80/20 rule, but there are regulators that monitor utilities and sign off on “legitimate” costs—a key difference. There was no such oversight for the health insurance industry." www.aeaweb.org/research/regulating-health-insurers-aca-medical-loss-ratio
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Post by anitya on Jun 2, 2021 17:24:54 GMT
HC insurance executives are the fat cats that go unnoticed. There is a lot of waste in that business.
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Post by Chahta on Jun 2, 2021 19:31:35 GMT
Medicare Advantage [MA/Part C] is Medicare contracted out to private insurers. Almost 40% of people covered by Medicare now have Medicare Advantage and most insurers are involved. I read somewhere that instead of getting paid a block rate and do/not-do whatever, Medicare Advantage pays by incidents/interactions/treatments. For a while, under the Covid lockdown, people were not going to doctors and that meant MA-insurers were not getting paid*. That is one explanation why we are bombarded with calls by UNH, our MA-insurer, about this or that but we ignore those. It is funny that they mail a huge plan booklet/guide and then call to go over it - I decline by saying I can read, thank you. *Unlike auto insurers who had profit windfalls and returned pittance on pressure from state regulators and complaints from customers (including mine). I know an “auditor” for United that only looks for certain codes and illnesses that will get reimbursement for Medicare Part C. They are very thorough to collect.
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Post by chang on Jun 4, 2021 3:34:55 GMT
When you say Universal Govt run Healthcare, I presume you mean only the insurance part of the healthcare. I can not imagine any other part of healthcare will be allowed to be run by the Govt. Currently, all health insurance companies are allowed only a limited profit - they are regulated like utilities....... Not disagreeing with anybody, but it makes me wonder why FSPHX's top three holdings are health insurance companies? fundresearch.fidelity.com/mutual-funds/view-all/316390301 Just FYI, Fido FLPSX's top holdings are also stocked up with HC insurers. Smart managers don't seem to worried by the nationalization threat. www.morningstar.com/funds/xnas/flpsx/portfolio
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Post by chang on Jun 27, 2021 9:02:58 GMT
Dare I ask whether HC is making a move? Over 6-12 months HC has lagged the S&P500 noticeably, which has totally flummoxed me, considering that humankind just managed to escape extinction from a pandemic. The last 2 months is the first time that HC has appeared to be on a steeper upward slope. It's a pity that M* disabled linkable chart comparisons, but pick your favorite HC fund/ETF, your favorite broad market index, and compare for yourself. I'm overweight HC and have no intention of buying more at this stage. But I'd like to see it revert to the mean, if not take the lead. Attachments:
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Post by anitya on Jun 27, 2021 20:27:19 GMT
chang, HC (along with CS) is supposed to be ballast but it’s performance has not been inspiring. Not sure where it is headed - I should have a clue, given it is the largest dedicated sector investment and only one of two sector investments I have but I do not.
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Post by Capital on Jun 27, 2021 21:32:14 GMT
The US is in the last third of the Early/Rebound (First) portion of the Business Cycle. Historically Health Care has done best in the Late/Moderating (Third) and Recession/Contracting (Fourth) portions of the Business Cycle. Historically the First portion has been the worst part of the Business Cycle to hold Health Care. institutional.fidelity.com/app/item/RD_13569_40890/business-cycle-update.html?pos=TI am currently overweight in Consumer Discretionary (which I will soon leave) = up 72% in 2.5 years. Communications and IT will be the sectors where I next move into. Of course IT seems to do well in all segments of the Business Cycle lately. eresearch.fidelity.com/eresearch/markets_sectors/sectors/si_business_cycle.jhtml?tab=sibusinessFor the last 10-15 years I have used what yogibearbull calls core and explore portfolio with 90-95 percent in my core and the rest my explore. In my explore I overweight sectors, now using Fidelity Sector EFTs. I have learned that I must invest somewhat blindly with the Business Cycle Chart in order to do well. Fidelity is good at keeping me informed regarding where we are in the Business Cycle. It is up to me to follow the tried and true no matter where my emotions tell me to go differently. This has worked for me well over the years.
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Post by chang on Jun 28, 2021 0:58:52 GMT
chang, HC (along with CS) is supposed to be ballast but it’s performance has not been inspiring. Not sure where it is headed - I should have a clue, given it is the largest dedicated sector investment and only one of two sector investments I have but I do not. My situation is even more extreme: I have three HC-focused vehicles, and these represent the only single-sector investments I have (excluding two individual stocks, which are small and essentially anomalous holdings). As vaccine rollouts continue, elective surgeries and procedures pick up, travel resumes, etc. I am expecting HC to outperform, from pharmas to hospitals to medical equipment and supplies to biotechnology. How can it not?
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Post by anitya on Jun 28, 2021 4:15:07 GMT
Instead of doing more research, I went back and read the thread from the beginning, which was very instructive. In my post of May 25, I gave a positive view of holding HC until October and now I notice that the sector has done well over the past 1 mo relative to YTD. I do not mind hanging on to HC funds if the sector keeps up with SPY, which we have to acknowledge is greatly influenced by technology companies and hence may not be as volatile relative to other sectors in it. Remember how USMV has increased technology weighting substantially since 2019.
P.S.: Soon after May 25, I liquidated FMEDX, which has done well over the past 1 mo, and moved the proceeds into FGDFX - it was an exchange at Fidelity. I probably should do the same with FSPHX, which has not done so well. FSPHX is less than 1% of my PV - HC funds are 6% +/- of my PV.
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Post by chang on Jun 28, 2021 5:24:28 GMT
My HC funds (FSPHX, FSMEX, XBI) are 2.5% of PV. FSPHX is the largest position at 1+% PV. FSPHX has lagged relative to its past performance [Top 15% over 3-15 years], but for the last year it's just middle-of-the-pack. I don't see a problem here; if anything, maybe a buying sign. (I would be more concerned about VGHCX which has lagged since Owens left.)
The Fido disruptor funds struck me as gimmicks, but good luck to them if they absorb new money that would otherwise flow into the other Select funds.
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Post by anitya on Jun 28, 2021 5:26:15 GMT
Today’s Last week tonight episode included a HC topic - starting after 9 minute mark: youtu.be/qZhpIjSSDm0
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Post by chang on Jun 28, 2021 5:52:57 GMT
The sound and video are (hugely) unsynchronized in that youtube, by something like 30 seconds, making it unwatchable for me. (I can listen without watching, but knowing how J.O.'s shows work, I suspect the audio alone would not make sense.)
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Post by anitya on Jun 28, 2021 6:49:39 GMT
I checked the part starting after 9 min mark and I paid particular attention for any unsychronity and I do not see any. Not sure if it does not have anything to do with your ISP. If you are still having a problem, try this which has only the HC piece (not the entire episode) - www.youtube.com/watch?v=oFetFqrVBNcP.S.: incidentally, the Youtube link I share in this post is from the lastweektonight channel I subscribed to. The link in the earlier post appears to be a bootleg version. Those of you with technology and Youtube knowledge, perhaps, would not mind educating me how bootleg versions are allowed to show up in Youtube, denying original content creators of their rights?
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Post by chang on Jun 28, 2021 7:11:51 GMT
Thanks anitya, that link works - I'm watching it now. I think the previous link didn't work because an extra intro was added to the video at the start, but not the audio, creating the asynchronicity.
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Post by anitya on Jun 28, 2021 7:59:47 GMT
The US is in the last third of the Early/Rebound (First) portion of the Business Cycle. Historically Health Care has done best in the Late/Moderating (Third) and Recession/Contracting (Fourth) portions of the Business Cycle. Historically the First portion has been the worst part of the Business Cycle to hold Health Care. institutional.fidelity.com/app/item/RD_13569_40890/business-cycle-update.html?pos=TI am currently overweight in Consumer Discretionary (which I will soon leave) = up 72% in 2.5 years. Communications and IT will be the sectors where I next move into. Of course IT seems to do well in all segments of the Business Cycle lately. eresearch.fidelity.com/eresearch/markets_sectors/sectors/si_business_cycle.jhtml?tab=sibusinessFor the last 10-15 years I have used what yogibearbull calls core and explore portfolio with 90-95 percent in my core and the rest my explore. In my explore I overweight sectors, now using Fidelity Sector EFTs. I have learned that I must invest somewhat blindly with the Business Cycle Chart in order to do well. Fidelity is good at keeping me informed regarding where we are in the Business Cycle. It is up to me to follow the tried and true no matter where my emotions tell me to go differently. This has worked for me well over the years. Hi Capital, Are many of the resources at the first link available only to institutional investors / RIAs? I was able to access the second link through my Fidelity account. Have you checked out the information under the "weighting recommendations" tab? Any thoughts on why the sector weightings under the first column are different from those for SPY at M*? I would have thought the sectors for both are determined based on GICS. Thanks. A
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Post by Capital on Jun 28, 2021 8:24:24 GMT
anitya , I have a PDF that I saved years ago that I obtained from the retail Fidelity site. The link I posted was one I googled last night. It is probably on the retail site as well. I have used that business cycle chart in tandem with Fidelity's business cycle study for years in making my weighting decisions. I have not used M* in over 15 years when I stopped subscribing and can not speak to their methodology.
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Post by yogibearbull on Jun 28, 2021 11:44:14 GMT
The US is in the last third of the Early/Rebound (First) portion of the Business Cycle. Historically Health Care has done best in the Late/Moderating (Third) and Recession/Contracting (Fourth) portions of the Business Cycle. Historically the First portion has been the worst part of the Business Cycle to hold Health Care. institutional.fidelity.com/app/item/RD_13569_40890/business-cycle-update.html?pos=TI am currently overweight in Consumer Discretionary (which I will soon leave) = up 72% in 2.5 years. Communications and IT will be the sectors where I next move into. Of course IT seems to do well in all segments of the Business Cycle lately. eresearch.fidelity.com/eresearch/markets_sectors/sectors/si_business_cycle.jhtml?tab=sibusinessFor the last 10-15 years I have used what yogibearbull calls core and explore portfolio with 90-95 percent in my core and the rest my explore. In my explore I overweight sectors, now using Fidelity Sector EFTs. I have learned that I must invest somewhat blindly with the Business Cycle Chart in order to do well. Fidelity is good at keeping me informed regarding where we are in the Business Cycle. It is up to me to follow the tried and true no matter where my emotions tell me to go differently. This has worked for me well over the years. Hi Capital, Are many of the resources at the first link available only to institutional investors / RIAs? I was able to access the second link through my Fidelity account. Have you checked out the information under the "weighting recommendations" tab? Any thoughts on why the sector weightings under the first column are different from those for SPY at M*? I would have thought the sectors for both are determined based on GICS. Thanks. A M* has its own sector classification system that differs from GICS (from S&P and MSCI). This is why SPY weights differ at Fido and M*. This is another example of M* doing its own thing. In some ways, M* was ahead in separating real estate before the GICS did, but now with both having 11 sectors, there is more possibility of confusion. Most differences seem in tech/IT, financials, consumer-discretionary/cyclicals. Not that some names also differ slightly. Elsewhere, I have noted that FAAMNG are now nonintuitively distributed within the GICS sectors and XLK, XLY, XLC.
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Post by Capital on Jun 28, 2021 13:06:20 GMT
anitya , below is the PFD I have that came from the Fidelity retail site. Exhibit 7 on page 9 it the business cycle chart. I know is says "institutional"; however, I was able to find this on my retail login in research for sectors and industries. Remember that in excess of 90% of my holdings are in a non-traded core. Less than 10% of my holdings are in this "trading" portion. By "trading" I mean that once every 2-4 years I will exit one position and enter a new one. I am really not a trader at all. I have also toyed a bit over the last 4 years with higher dividend stocks to get a feel for that market. If I do not get enough growth over the next 6-10 years I may need those skills to create income in retirement. I am hopeful that the market will provide me and my spouse with the necessary growth to make that not a necessity. I also see that yogibearbull has addressed the M* question; and, I wish to personally thank him for his response as well. institutional.fidelity.com/app/literature/view?itemCode=943044&renditionType=pdf&pos=na
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Post by anitya on Jun 28, 2021 14:28:48 GMT
Thanks, Capital and Yogi, for your replies.
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