Tom Tobin suggests there are reasons to be wary of health care investing in 2016. The article provides numerous things to consider. Here are a few excerpts:
"From the beginning of 2013, the year before the roll out (of Obamacare), to the peaks of 2015, the S&P 500 was up +47.8% while the XLV nearly doubled that effort by rising +91.1%. For the hospitals, who likely saw the most incremental benefit, increased patient volume and less unpaid charity care led to stock returns of +141.6%. In small terms, a $10,000 investment in a basket of hospital stocks would have peaked a few months ago at over $24,000. In big terms, the XLV added an additional $5.0 billion in market capitalization over the same period going from $12.7 billion to $18.7 billion. The reason the portfolio returns were so big is because the tide of newly insured medical consumers was so large; the largest in over 30 years by our estimate."
"Heading into 2016 we will enter a period we are calling the #ACATaper, when the benefits of millions of new medical consumers and the money to pay for their care tapers off back to slow to negative growth and the industry resumes grappling with the litany of cost pressures that existed before Obamacare, and will certainly exist after it."
"The ACA has created a year-over-year comparison so enormous that healthcare stocks will probably unwind rather violently. In fact, there is already evidence that the taper is underway as we have already seen an abrupt about-face for the industry."
"Beyond 2016, there are additional industry headwinds to consider which the ACA either masked or exacerbated. Demographics are putting downward pressure on pricing as Baby Boomers are graduating into Medicare leaving their employer-based commercial insurance behind."
"One of the great alterations that Obamacare made to the U.S. Medical Economy, among the many others, is the rise of information technology in the delivery of healthcare. The highly likely outcome over the years to come is that Americans receive better care at a cheaper price; a crazy idea after 50 years of excess healthcare inflation. Breaking the inflation cycle will be one of the great benefits of Obamacare."
"For now, given what we think unfolds in 2016, we would encourage investors to approach healthcare stocks with extreme caution in the short term. That’s why our list of shorts is far longer than our longs these days, and it’s going to be a while before that changes."
See:
http://www.investopedia.com/articles/investing/122115/why-perfect-storm-brewing-healthcare.asp 
Comments
Awww, how cute -- they declared their own proprietary hashtag......