Winning Sectors in the Stock Market
Growing your stock portfolio is about looking for future winners in the stock market. Since investing in the stock market is about predicting future winning stocks, you need a place to begin your search.
First, a disclaimer: there are no guarantees in the stock market. What has been the historical trend may or may not continue. Sure bets today are often tomorrow's losers. In the same manner, today's overlooked stock may be tomorrow's block buster.
That's just the nature of risk and reward.
Your first step in picking future winners is to look where you think they most likely reside now, in other words what stock sectors seem the most likely to experience more than their share of growth for the next five years or so? This is the first of a two-part look at that question.
Two easy answers come to mind - there are undoubtedly others - in technology and healthcare. Both sectors have histories of sustained growth, but also some periods of disastrous decline (remember the dot.com bubble which burst in March of 2000).
You could pick exchange traded funds or mutual funds that track these sectors and, for those with little interest in researching your investments, that may be a good choice.
However, if you like to get your hands dirty I suggest you consider these two sectors. You will need to dig much deeper than that obviously. Here are my reasons for liking the two sectors and those parts of each where I believe opportunity may be found.
The healthcare sector is an obvious choice because of the tremendous changes that are sweeping the industry.
Healthcare reform, whatever form it takes, will be awash with investments, including new facilities and equipment, federal dollars as incentives for innovation, research and development.
Technology needs no introduction. The advances here have fundamentally changed the way we live, work and play. There is no indication the pace of technological change will slow anytime - if ever. Global competitors in China, India and other foreign countries will keep pushing Americans to innovate. When that happens, opportunities are born.
One of the most exciting trends, which is building speed, is the wedding of healthcare and technology. As technology revolutionized how offices and factories run, it has also push healthcare forward.
There will be many opportunities for companies in the healthcare sector to shine. Two areas that I see are particularly promising are electronic health records (software and hardware) and out-sourcing procedures to save money.
There are already many players in the electronic health record (EHR) business, but there is still plenty of room for innovation. For example, there are a number of vendors providing EHR software to large hospitals and major clinics.
However, most doctors, dentists and other providers practice in small hospitals, clinics or practices. Finding a good solution for them will be important for the goal of having EHRs transferable between various systems.
The goal is for any provider to have access to your health records if you move to a new location or change providers. Ultimately, there may be a database that lists everyone with a chronic or major health condition so that if you are sick or injured, any emergency room could access your record and provide the immediate care that is so often important in critical situations.
While EHRs are extremely important to healthcare delivery in a more efficient manner, they also open the door to security issues. No system is hack-proof, but healthcare consumers need to be protected from unauthorized access to their records. There are strict laws covering the disclosure of medical records, but what is needed is another level of system security that allows records to be portable (over the Internet), but protects the contents.
These ideas are just a small part of the many opportunities you may uncover in the healthcare sector. I hope they get you thinking about these and other ideas.
Integrating off-the-shelf technology such as tablets and smartphones is another area of tremendous growth. That will be covered in the next installment.
First, a disclaimer: there are no guarantees in the stock market. What has been the historical trend may or may not continue. Sure bets today are often tomorrow's losers. In the same manner, today's overlooked stock may be tomorrow's block buster.
That's just the nature of risk and reward.
Your first step in picking future winners is to look where you think they most likely reside now, in other words what stock sectors seem the most likely to experience more than their share of growth for the next five years or so? This is the first of a two-part look at that question.
Two easy answers come to mind - there are undoubtedly others - in technology and healthcare. Both sectors have histories of sustained growth, but also some periods of disastrous decline (remember the dot.com bubble which burst in March of 2000).
You could pick exchange traded funds or mutual funds that track these sectors and, for those with little interest in researching your investments, that may be a good choice.
However, if you like to get your hands dirty I suggest you consider these two sectors. You will need to dig much deeper than that obviously. Here are my reasons for liking the two sectors and those parts of each where I believe opportunity may be found.
Healthcare and Technology Stocks
The healthcare sector is an obvious choice because of the tremendous changes that are sweeping the industry.
Healthcare reform, whatever form it takes, will be awash with investments, including new facilities and equipment, federal dollars as incentives for innovation, research and development.
Technology needs no introduction. The advances here have fundamentally changed the way we live, work and play. There is no indication the pace of technological change will slow anytime - if ever. Global competitors in China, India and other foreign countries will keep pushing Americans to innovate. When that happens, opportunities are born.
One of the most exciting trends, which is building speed, is the wedding of healthcare and technology. As technology revolutionized how offices and factories run, it has also push healthcare forward.
Healthcare Stock Specifics
There will be many opportunities for companies in the healthcare sector to shine. Two areas that I see are particularly promising are electronic health records (software and hardware) and out-sourcing procedures to save money.
There are already many players in the electronic health record (EHR) business, but there is still plenty of room for innovation. For example, there are a number of vendors providing EHR software to large hospitals and major clinics.
However, most doctors, dentists and other providers practice in small hospitals, clinics or practices. Finding a good solution for them will be important for the goal of having EHRs transferable between various systems.
The goal is for any provider to have access to your health records if you move to a new location or change providers. Ultimately, there may be a database that lists everyone with a chronic or major health condition so that if you are sick or injured, any emergency room could access your record and provide the immediate care that is so often important in critical situations.
While EHRs are extremely important to healthcare delivery in a more efficient manner, they also open the door to security issues. No system is hack-proof, but healthcare consumers need to be protected from unauthorized access to their records. There are strict laws covering the disclosure of medical records, but what is needed is another level of system security that allows records to be portable (over the Internet), but protects the contents.
These ideas are just a small part of the many opportunities you may uncover in the healthcare sector. I hope they get you thinking about these and other ideas.
Integrating off-the-shelf technology such as tablets and smartphones is another area of tremendous growth. That will be covered in the next installment.
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