Healthcare and Staples Diverge

I want to revisit a subject I touched on a few months ago, and that’s the major divergence between healthcare stocks and consumer staples stocks.

Market watchers have long known that these two sectors tend to behave similarly. The reason is that both are countercyclical economic sectors. If the economy goes down the drain, folks cut back on other stuff a lot more than they do healthcare or toothpaste. That’s just how it is, so these two sectors tend to hold up well when things aren’t so hot.

But in the last few months, healthcare has ticked up while staples haven’t done much at all. So what’s going on? I honestly don’t know. Perhaps something about Obamacare? Either way, I pay attention whenever long-term trends break down.

Posted by Eddy Elfenbein on March 3rd, 2014 at 8:11 am

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