Thursday, February 26, 2009

Gross: Stocks no good for the long run

Bill Gross exchanges emails with consultant and TV talking head Peter Cohan. Gross tells Cohan:

"Global growth rates -- low, low, low -- asset classes will be readjusted for that outlook. That is -- stocks will be more of a subordinated income vehicle as opposed to a 'stocks for the long run' growth vehicle."

Health care sector craters

One of the relative bright spots in the market was the healthcare sector. (VHT, IHE, IHI). No more. The stocks got whacked today, breaking near term support.

There are really no places to invest. High holdings of cash recommended (about 35% in recommended list, plus 20-30% in TIPs)

According to Marketwatch:

Shares of managed-care companies extended their declines as the Obama administration's proposed budget would put in place vast reductions in payments to private insurers through the Medicare Advantage program and would implement a bidding process for insurers. Humana dropped the most, losing 20% in recent trade.
The WSJ Health Blog says:

Health insurers’ stocks are taking a beating today as investors digest the Obama budget proposal’s push to cut federal payments to insurers that run private Medicare Advantage plans.... Humana, United and Coventry are among the biggest players in Medicare Advantage, which helps explain why their stocks are taking the biggest hits.
I'm sitting on the sidelines in healthcare now. This is still a sector to watch when the bull market returns.