A healthy balance

DOUG By Guest Blogger Doug Rowat

In October 2003, a tractor-trailer shipping Biovail’s (now Valeant Pharmaceuticals) anti-depressant Wellbutrin XL overturned spilling tens of thousands of pills along an Illinois highway. In less than a week, Biovail stock plunged more than 33% and the S&P/TSX Health Care Index dropped almost 15%. The decline highlighted one of the deficiencies of investing in Canada: lack of sector diversification. For millions of Canadian investors, gaining health care exposure essentially meant buying one or two companies, which placed an incredible burden on their operational success.

Almost 15 years later, nothing has changed. In fact, the Canadian health care sector has only become more problematic as Valeant—one of only six stocks in the S&P/TSX Health Care Index—has seen its market cap move from a high of roughly $118 billion in 2015 to less than $10 billion currently, emphasizing the volatility within the Canadian health care sector. The US S&P 500 Health Care Index, by comparison, has 62 members with 59 having market caps greater than Valeant. Needless to say, US health care investors are not concerned by overturned delivery trucks.

So, the importance of looking outside Canada for broad exposure to this important and recession-resistant sector is obvious. According to Deloitte, global health care expenditures are projected to reach US$8.7 trillion by 2020 from US$7.1 trillion in 2015 and IQVIA estimates that global spending on medicine alone will rise to US$1.4 trillion by 2020 from US$1.1 trillion in 2015. Naturally, emerging markets will be a big driver of this additional spend. IQVIA notes that China, India, Brazil and Indonesia, for example, with a combined population of 3.23 billion in 2020, will account for nearly half of the increased medicine usage globally.

And, of course, the growth will never stop. ‘Favourable demographics’ is perhaps an overly cited and difficult-to-time catalyst, but it’s still worth noting that the world is aging rapidly. The United Nations notes that

Virtually every country in the world is experiencing growth in the number and proportion of older persons in their population…. the number of older persons—those aged 60 years or over—is expected to more than double by 2050…rising from 962 million globally in 2017 to 2.1 billion in 2050….

Further, according to research and consulting firm Frost & Sullivan, people over 60 years use 4–5 times more health care services than younger people.

So, in short, every long-term portfolio needs global health care equity exposure and the Canadian market alone just won’t provide it.

Healthcare Spending: 2015-2020

Source: Deloitte; US$ billions

There is also a reasonable probability that there will be another US recession at some point in the not too distant future (one or two recessions per decade is a consistent, if unpleasant, average). Another advantage of health care exposure is its non-cyclical defensiveness. Understandably, US health care stocks outperform during periods of economic weakness; however, this outperformance has been remarkably consistent over all periods. The chart below illustrates the long-term outperformance of the S&P 500 Health Care Index vs the broader US market. Note that Health Care has strongly outperformed in each of the past three recessions. A relatively straightforward example of health care defensiveness was illustrated during 2008 when the S&P 500 fell 38.5% while the S&P 500 Health Care Index dropped only 24.5%.

Health Care Outperforms During Economic Weakness – And Just Outperforms Generally

Source: Bloomberg; chart measures cumulative price return (%)

So, for all the reasons above, a globally balanced portfolio needs health care. Currently, our weighting within the equity component of our model portfolio is modest (~10%), but this will steadily increase over time and we will certainly more rapidly add to health care if we sense increased risk of a bear market.

Stay well. And hopefully a few Tylenol will be your only contribution to the global medicine-spend this holiday season.

Cheers to your (portfolio) health.

Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.

 

71 comments ↓

#1 Party on Garth on 12.16.17 at 3:55 pm

“The borrowing and spending binge by Canadian households, businesses and governments (all levels) continues unabated. Growing the debt in the economy significantly faster than the economy itself grows seems to have developed into a way of life in Canada.”

Canadian total (household, business, and all levels of government) debt numbers as of the end of September, 2017

http://owecanada.blogspot.ca/2017/12/canadian-total-household-business-and.html

#2 Parksville Prankster on 12.16.17 at 4:02 pm

I’ve been doing some research lately on the Permanent Portfolio, introduced by Harry Browne in the early 1980’s
(25% CASH/T-Bills, 25% Gold, 25% Bonds, 25% Equities), which has provided an annualized return of 9.7% from 1972 through 2008, with an extremely low volatility of 5.6% over rolling three year periods. Do you have any general thoughts on this type of diversification?

#3 SmarterSquirrel on 12.16.17 at 4:16 pm

What do you think of these two thoughts on diversification from Warren Buffett?
“I have two views on diversification. If you are a professional and have confidence, then I would advocate lots of concentration. For everyone else, if it’s not your game, participate in total diversification…”

More on his thoughts of diversification here …
http://m.nasdaq.com/article/warren-buffett-on-diversification-cm519920

Based on that if seeking professional portfolio assistance, should a person seek diversification or concentration? If it’s diversification with a professional couldn’t a person just buy three Vanguard Etf funds themselves instead and average 7% anyway while being diversified and save the professional fees?

#4 espressobob on 12.16.17 at 4:16 pm

Passive global index investors already hold pharms. Sector plays employ more risk.

The TSX composite on the other hand and held in a non-registered account enjoys tax relief and doesn’t require major upside.

Waiting for that damn T3 into the new year is another story.

#5 young & foolish on 12.16.17 at 4:17 pm

“The borrowing and spending binge by Canadian households, businesses and governments (all levels) continues unabated…. ”

This is something not well understood by people. Debts seem to never come down … ever! So, is this a problem, or not? Can somebody on this financially literate blog explain this?

#6 (((Glenn Archobowitz))) on 12.16.17 at 4:18 pm

I feel some guilt into investing in healthcare companies who charge over US$1,000 for a pack of pills, and hospitals which charge over US$120,000 a night for cancer treatment.
I don’t think it’s ethical IMO. The same pack of pills sell in India for US$10, and US$120,000 can probably buy you an entire room forever in a hospital in India.

#7 rental property math on 12.16.17 at 4:30 pm

I thought this post was going to end up being about weed stocks.

#8 Richard Thorncroft on 12.16.17 at 4:38 pm

“Almost 15 years later, nothing has changed. In fact, the Canadian health care sector has only become more problematic as Valeant—one of only six stocks in the S&P/TSX Health Care Index—has seen its market cap move from a high of roughly $118 billion in 2015 to less than $10 billion currently, emphasizing the volatility within the Canadian health care sector.”

*.*.*.*.*.*.*. Truth Powder .*.*.*.*.*

Almost 15 years later, nothing has changed, including Valeant’s share price @$25, emphasizing once again, that Canadians blow the biggest bubbles.

Rich

#9 The Awakend One on 12.16.17 at 4:43 pm

Thanks Doug!

Reading this post is 10x better than taking Viagra…
I learn something new, and will re-balance accordingly: less pills, more Healthcare ETF exposure.

Great work, very educational! Best of the Season to you guys!

#10 Lost...but not leased on 12.16.17 at 4:56 pm

Health Care:

Suggest read or research “Dr. Mary’s Monkey”..

you were advised/warned…

#11 jess on 12.16.17 at 5:02 pm

Behind the seemingly simple act of buying a bottle of pills, a host of players — drug companies, pharmacies, insurers and pharmacy benefit managers — are taking a cut of the profits, even as consumers are left to fend for themselves, critics say.

https://www.propublica.org/article/when-buying-prescription-drugs-some-pay-more-with-insurance-than-without-it

#12 jess on 12.16.17 at 5:04 pm

india’s market

Over 60,000 companies in Maharashtra are shell entities with no active business operations or staff, and of these, about 70 per cent are based in Mumbai, it has emerged.

“All government departments have been directed not to allow these firms to take part in any tender floated by the state.”

Shell companies are used by businesses and individuals as vehicles for secret financial manoeuvres, including money laundering. Agencies that probe financial crimes have reported cases where people traded shares of companies with no genuine business activity. They used unaccounted cash to buy the shares, which were sold off after the prices were fraudulently jacked up.

A senior official in the state industries departments said out of 60,105 shell companies identified in Maharashtra, around 70 per cent were believed to be based in Mumbai.

Bhatkhalkar said he had urged the Devendra Fadnavis government to complete the attachment process within three months.

In all, the Centre had identified around 3 lakh suspicious firms, many of which had not undertaken any business transaction for years or filed returns. A large number of entities — in one case 400 — had provided the same address for registration. As many as 36,000 companies came under scrutiny for money laundering. Around 160 firms listed on stock exchanges are believed to be shell firms. Regulators have been asked to suspend trading of their stock till they prove they are legitimate business.

#13 Danny on 12.16.17 at 5:13 pm

Very informative facts.
But your projection about a serious recession in the US of A…..seems to confuse me…..when just this week seems that Garth spoke so hopeful about the unprecedented tax savings for the very rich Americans.
Maybe I misread Garth? Sorry.
But in my mind confusion is further in my mind……a Republican Party that is driving up debt….while lowering taxes.
Isn’t that what conservatives in Canada always mocked the NDP……about increasing the Debt?
Seems Trump……who could not remember his own birth date is more intellectually deficient than many thought…..and is so used to declaring bankruptcy…..is going to bankrupt the American government.
I agree a recession is inevitable.
When that American Dog wags its tail…..look out Canada hold on to your hat .

Trump isn’t worried……..Huge persona tax savings while giving his family members great Government Jobs in his Trump SWAMP.

#14 Doug? on 12.16.17 at 5:16 pm

what vehicle do you use to gain exposure to healthcare?

xlv? its in USD :(

f series mutual fund?

#15 Andrew Woburn on 12.16.17 at 5:30 pm

Thanks, Doug. I have been mulling over a US healthcare investment and that was the final push.

I must admit I am sensitive to the ethical concerns of Glenn Archobowitz in post #6 but the picture is murky.
Tobacco stocks are a great investment but their product has no purpose other than to snare people into a life of addiction and disease. Health care is a necessity.

Americans seem to have freely chosen their expensive regime otherwise they would support Bernie Sanders.
Who am I to argue?

#16 Newcomer on 12.16.17 at 5:53 pm

#6 (((Glenn Archobowitz))) on 12.16.17 at 4:18 pm
I feel some guilt into investing in healthcare companies who charge over US$1,000 for a pack of pills, and hospitals which charge over US$120,000 a night for cancer treatment.
——–

It’s complicated, because the $1K price covers buildings full of researchers working for years on things that don’t pan out, and the hospital fees in the US cover to cost of providing services to people without health insurance. But if you think that profits are too high in the sector, the best way to bring that down would be to promote competition. More people stepping up and trying to do it better and cheaper than the next guy means lower prices (the old supply and demand thing). The best way to promote competition (short of getting a PhD in biochemistry and starting your own lab) is to invest in companies to do that on your behalf.

In other words, investors in the sector are putting their money where their mouth is to lower costs and should feel less guilt than people who put their money elsewhere.

#17 Doug Rowat on 12.16.17 at 6:05 pm

#3 SmarterSquirrel on 12.16.17 at 4:16 pm

If it’s diversification with a professional couldn’t a person just buy three Vanguard Etf funds themselves instead and average 7% anyway while being diversified and save the professional fees?

Depends on what 3 ETFs. It also depends on your own personal fortitude when you’re in the midst of a bear market. Some professional discipline and guidance will likely be essential at these times. A good full-service broker will also provide much more than just portfolio management.

–Doug

#18 jess on 12.16.17 at 6:08 pm

uber: denoting an outstanding or supreme example of a particular kind of person or thing.

“above” the law too?

Uber accused of espionage, hacking and bribery in bombshell letter
by Heather Kelly @heatherkelly December 16, 2017:

http://money.cnn.com/2017/12/16/technology/uber-jacobs-letter/index.html4:47 PM ET

#19 For those about to flop... on 12.16.17 at 6:09 pm

Stay well. And hopefully a few Tylenol will be your only contribution to the global medicine-spend this holiday-Doug

/////////////////////

Hey Robax,you could have substituted the word Tylenol for Robax.

I know you wanted to!

Anyway to support your post I will resubmit this article I put up a short time ago.

Not a Christmas sort of guy, but that won’t stop me from wishing you and your family a Happy Holiday season…

M43BC

“Where Does Your Medicine Come From? This Map Shows You

Drugs and medicine are big business. In 2016, there was a 1.5% global decline in the total value of drug and medicine exports. Even with that drop, the industry’s players exported $318B, making drugs and medicine one of the world’s top industries. But where do all those pills, serums, and creams come from? We wanted to find out. So we dissected the data from 2016and broke it down by continent, country, and export totals. Then we put it on this map. Check it out.

Who gets all the medicine money?
For most of the world’s population, medicine comes from somewhere else. This is truest among residents of the Southern Hemisphere. As our map reveals, there is a big disparity between the industry’s export totals in the north and the south. And I mean big. The Northern Hemisphere exports 55 times more drugs and medicine than the Southern Hemisphere.

While Europe holds a dominating 79.2% market share, the entirety of Central America, South America, Africa, and Oceania export only 1.8% of the world’s drugs and medicine. Africa exports the fewest (0.2%), despite having 15% of the world’s population.

In Africa specifically, the disparity feels dubious. Africans are plagued with disease and illness, but have no significant market for drugs and medicine. That means that they need to import them all. Impoverished and dependent on foreign nations for medical support, Africans are in a bad spot.

America’s role in the drug market
In 2016, the U.S. exported drugs and medicine valued at $22.5B. That is more than every other country in the world, except for four:

France ($22.8B)

Belgium ($26.5B)

Switzerland ($39.9B)

Germany ($48.6B)

The U.S. eked out the U.K.’s sixth place spot by a mere $500M. In the Western Hemisphere, the U.S. has no rival in drug and medicine exports. Canada comes closest, at $7.4B. Mexico exported $1.2B. No nation in South or Central America has joined the billionaire’s club.

Market trends
In Europe, it’s obvious that all the cool kids are exporting drugs and medicine. The concentration of knowledge, training, medical manufacturing, and infrastructure that must cause (and result from) this huge market it makes it unlikely that the Europeans will see their market share disappear to another part of the world. In fact, European countries are still seeing impressive growth. Switzerland and the Netherlands in particular, have seen notable increases.

South Africa and Egypt – two of Africa’s three biggest economies – have developing drug and medicine export economies, but the numbers remain low. While it will probably be these two nations that lead the way in African medical development, they still have a long way to go before they become major players”

https://howmuch.net/articles/world-map-of-drug-exports-2016

#20 When Will They Raise Rates? on 12.16.17 at 6:22 pm

#128 Smoking Man on 12.16.17 at 1:09 pm
Just bought 222 shares of IOTA the new and improved version of block chain. Cost 1000 bucks.

Venture capital.
————

Welcome to the club!

I was wondering when you’d finally join us…

If you still have that blog, I’ll send you link to a PDF that lays out my method of making 5-10% profit in BTC every day. Literally. Zero risk.

#21 David on 12.16.17 at 6:28 pm

Buy the U.S. U.S. equities, instruments and dollars.
Canada is going nowhere but down at this time. I don’t like saying it, but it’s true.
We need a change in government asap in Ottawa, Ontario, B.C. and Alberta – and that’s a heavy lift. The amount of structural damage caused by the present governments, especially in Ontario, will take the better part of a generation to fix. If ever.

#22 Free Dumb on 12.16.17 at 6:43 pm

#128 Smoking Man on 12.16.17 at 1:09 pm
Just bought 222 shares of IOTA the new and improved version of block chain. Cost 1000 bucks.
———————
1000 bucks? Living on the edge. wow.

#23 Ronaldo on 12.16.17 at 7:05 pm

Bitcoin alert. CME futures trading starting tomorrow.

http://money.cnn.com/2017/12/08/technology/bitcoin-ico-fraud/index.html

#24 Mel on 12.16.17 at 7:05 pm

14 Doug? on 12.16.17 at 5:16 pm

what vehicle do you use to gain exposure to healthcare?

xlv? its in USD :(

f series mutual fund?

I use BMO,s ZUH very strong performance to date

#25 young & foolish on 12.16.17 at 7:11 pm

“Based on that if seeking professional portfolio assistance, should a person seek diversification or concentration? If it’s diversification with a professional couldn’t a person just buy three Vanguard Etf funds themselves instead and average 7% anyway while being diversified and save the professional fees?”

I would suggest the 3 Vanguard ETFs for 75% of your wealth … for the other 25, try turbo-charging your growth through momentum investing.

#26 Ronaldo on 12.16.17 at 7:22 pm

How much energy does it take to mine bitcoins worldwide? This will make you sit up and take notice.

https://www.wired.com/story/bitcoin-global-warming/

Hold off on mortgaging the house, this may not end well.

#27 Hanna on 12.16.17 at 7:23 pm

Thanks Doug. This very helpful.
Can anyone recommend an etf with US healthcare companies?

#28 windsor guy on 12.16.17 at 7:24 pm

Hi Doug, is our exposure to health care sufficient at this time through our equity etfs, or should we be holding some through a stand alone healthcare etf ?

#29 Rooster on 12.16.17 at 7:42 pm

My daughter spent two years saving lost souls at one of the 150+ methadone clinics in Ontario. The clientele were largely ordinary men and women with chronic pain, often the result of car accidents, whose GP’s rubber-stamped their passports to opiate addiction. Many of them lost everything. I think I’ll take a pass on the pharmaceutical space. I would rather bet on gambling, but I couldn’t do that either.

#30 I’m stupid on 12.16.17 at 7:44 pm

I don’t know what people are thinking… I was waiting in line at the checkout in the grocery store. The lady in front of me had two items one was a create of oranges. The cost was $14 for the oranges, she said it was too much and didn’t want them. Then she asked the cashier for lotto max tickets $12 worth. So basically the lady chose $12 lotto max over $14 for oranges.

Is the difference between financial success as simple as choosing oranges over lotto max? Choosing the oranges over the lottery gives you the highest probability of a favourable outcome. If you always choose the scenario with the highest probability of the greatest returns, in every decision you make, won’t that equate to success in life?

#31 Smoking Man on 12.16.17 at 7:45 pm

#22 Free Dumb on 12.16.17 at 6:43 pm
#128 Smoking Man on 12.16.17 at 1:09 pm
Just bought 222 shares of IOTA the new and improved version of block chain. Cost 1000 bucks.
———————
1000 bucks? Living on the edge. wow.
….

A bet is a bet. My kid picked it. Trying to teach him a lesson that this shit is garbage.

Or maybe I know something.

#32 crowdedelevatorfartz on 12.16.17 at 7:50 pm

Just say a posting on another blog.
The Vancouver sales market is a “zombie market”…
Because it doesnt know its dead.

#33 Doug Rowat on 12.16.17 at 7:57 pm

#28 windsor guy on 12.16.17 at 7:24 pm

Hi Doug, is our exposure to health care sufficient at this time through our equity etfs, or should we be holding some through a stand alone healthcare etf ?

If you’re a client then likely yes. If you’re not then you’re giving me credit for David Blaine mind-reading powers.

–Doug

#34 Keith in Rio on 12.16.17 at 7:58 pm

Now back to our scheduled programming.

The 250 unit condo we have been living in for 7 years has remained steady at $240K per one bedroom unit since we moved here. Rents were always $,400-1,500 (no parking inc) due to the walking distance to the university in Calgary.

The last 6 months have seen prices drop to $219K and rents are now $1,200 including parking.

#35 For those about to flop... on 12.16.17 at 8:01 pm

Recent Sale Report/ Realtor Assistance Needed.

O.k,in my never ending quest to get Robax over the century mark I will do a few Pink Pumpkin Posts.

This one sold 8 days ago

1772 55 st,Delta.

Paid 1.14 May 2016

Asking 1.09

The listing states this house is in the Cliff Drive area of Delta.

I think it’s a typo and should read Cliff Dive…

M43BC

https://www.zolo.ca/delta-real-estate/1772-55-street

#36 For those about to flop... on 12.16.17 at 8:19 pm

Pink Pumpkins being carved in West Vancouver.

Heavy Hitters Alert.

This one is in a similar area and similar price point as my biggest Pumpkin yet ,over at Pilot Rd where the owners took over 1 million dollar loss after expenses and opportunity costs were factored in.

Not real sure what these guys were trying to get out of it ,besides a bum kicking as they appear to have been a year too late.

Since this is a health based post I might as well read you the fine print.

Buying real estate for over 5 million and trying to flip it during a correction will definitely bring on High Blood Pressure,dizziness,dry mouth and throat.

Also you have no worries about having to seek medical attention for having an erection lasting four hours as this is a physical impossibility with shredded nerves and your body’s need to have blood pumping elsewhere to stave off a catastrophic event.

Hope your doctor can read your Chartwell…

M43BC

1356 Chartwell Dr,West Vancouver.

Paid 5.69 May 2017

Asking 5.48

https://www.zolo.ca/west-vancouver-real-estate/1356-chartwell-drive

#37 For those about to flop... on 12.16.17 at 8:51 pm

Pink Pumpkins being carved in Burnaby.

Show me something more affordable cried the masses.

O.k,no problem.

This Vancouver Special is finding out that it isn’t that special after all.

This houses price has been going up and down faster than a fat kid on a see-saw.

They could still make out o.k but this one has Pink Draw written all over it.

It is amazing how many of my cases sell in between 5 and 10% more than previously,which keeps the prices ticking upwards but then after factoring in expenses no real money is made.

Except for the realtors.

You strike out, they still score.

Will the Empire Strike Back even if the courts force them to become more transparent?

You betcha.

This blog is my lightsaber and I could end up being The Last Real Estate Jedi.

To paraphrase Obi -Wan Kenobi when he once urged Luke Skywalker to use the force…

Luke, you must learn to use the Flop…

M43BC

4062 Venables St,Burnaby.

Paid 1.67 April 2016

Asking 1.75

Were asking 1.59 at one stage

https://www.zolo.ca/burnaby-real-estate/4062-venables-street

#38 crossbordershopper on 12.16.17 at 9:34 pm

Canada has health care stocks? really. Simply buy American bio’s and health care. Yes its a for profit system, and i guess people on this blog like money so if you want exposure to this industry, Canada like so many other things has no exposure to this.
What a couple retirement home stocks. OMG Canada is a joke of a country, they let any clown from overseas in. and dilute the existing hard working Canadians with your crazy rules, low growth, low canadian dollars, bad weather, bad food, high costs, crazy real estate prices, congestion on the 401 like i have never seen other than in LA. and Chicago. a little.
Chirstmas in Florida over Christmas in Milton anyday.

#39 molson cdn on 12.16.17 at 9:34 pm

“Health Care Outperforms During Economic Weakness”
oh my god!!!
How did you get on here to make this kind of statement?
In Garths fantasy world, he believes the economy is on fire. Just take a look at the lastest govt figures.
stock market on fire, more jobs created, less unemployment, lower cost of living becuse of cheaper gas which means more disposable cash into the economy etc… etc…

#40 robofoolz on 12.16.17 at 9:41 pm

Garth old buddy old pal,

The time is nigh for you to get ahead of the curve and create a RoboGarth investment advisory

https://www.thestar.com/business/personal_finance/2017/12/16/investment-firms-fear-tech-companies-getting-into-their-business.html

Just think of all the money you could save on salaries for Dougie and the rest of the help

#41 IHCTD9 on 12.16.17 at 9:52 pm

#119 TurnerNation on 12.16.17 at 10:57 am
Proof Toronto house prices are out of whack (whacked out) at the lower end due to ‘Nesting Wasps’.

They are bidding up sht bungs and slanty semis to a cool million bucks.

Look at this mansion 1/2 hour from downtown core – words cannot describe it!

https://www.realtor.ca/Residential/Single-Family/18851007/95-OLD-COLONY-RD-Toronto-Ontario-M2L2K3-Bridle-Path-Sunnybrook-York-Mills

It’s only 14 million! Look at it this way, is this house 14 times better than a million dollar slanty semi with its mud basement, attic raccoons, and on-street parking. Yes!

Is this house 20x better? YES! 30 times! HOO YA.

So, 14 million is an absolute bargin. I think you could fit 14 sht bungs into its garage.

Look at the lot size..land value alone – not that zoning would allow – it at least 20 million, given a small community could there be built.

———

Excellent observation TN, you are bang on. This is the exact same thing I pointed out to “tulips” the other day using my used truck buying experience. The lower end of the market was bid up so high, there wasn’t a shred of value left for the money. The more expensive trucks had less competition between buyers, so the higher prices yielded disproportionately higher bang for the buck. The asking prices are much closer to the intrinsic real value on the bigger properties compared to the bubbly pie in the sky bungs for a mil. These extremely overpriced examples will crash like a Cessna if the mania comes to an end.

#42 BC_Doc on 12.16.17 at 9:52 pm

Betting on/overweighting a single sector doesn’t sound very balanced to me. Buying several broad index funds such as VXC-T, VCN-T, and VAB-T? Now there’s a sleep at night balanced growth portfolio for me.

#43 NoName on 12.16.17 at 9:52 pm

Very interesting read

In the United States, body armor manufacturing is a $465 million-a-year industry, according to an August report from Market Research. And the global market for such wares is expected to be worth $5.7 billion by 2024, according to a 2016 study by Grandview Research.

https://www.racked.com/2017/12/14/16738162/bulletproof-clothing

#44 Bottoms_Up on 12.16.17 at 10:09 pm

#16 Newcomer on 12.16.17 at 5:53 pm
—————————
Yes, but pricing is also set based on extent of benefit, existence of alternative treatments, and willingness of provincial governments to cover it.

#45 Doug Rowat on 12.16.17 at 10:22 pm

#39 molson cdn on 12.16.17 at 9:34 pm

“Health Care Outperforms During Economic Weakness”
oh my god!!!
How did you get on here to make this kind of statement?
In Garths fantasy world, he believes the economy is on fire. Just take a look at the lastest govt figures.
stock market on fire, more jobs created, less unemployment, lower cost of living becuse of cheaper gas which means more disposable cash into the economy etc… etc…

Are you disagreeing with me or yourself?

–Doug

#46 Lost...but not leased on 12.16.17 at 11:05 pm

From last post #143 A GuyInVancouver.

Re the property I sold..

Actually the purchaser is a local developer which our realtor knew. All the stars aligned, the metrics indicated market price for the zoning would be $2.1 X…we sold for a bit less and developer paid the commission. Clean deal…no subjects..as is…closed within 7 weeks. Done. Ironically the same developer built a project immediately West.

As I stated…had the advantage of what was a fair and realistic market price under highest and best use. Sure, one could have tried fishing for a speculator, but my gut feel ( thanks to blogs like this)was the market was turning,as well as , relatively speaking, every added dollar I strived for was benefitting CRA and other family members. Don’t get greedy, don’t frustrate a good deal..one may not get a comparable one.

If other properties garner higher prices..so be it. My point is doing the homework, determining what market price was…..otherwise higher prices would be speculators gambling and buying into a peak,if not declining market..not developers which I did business with.

A bird in the hand…..

#47 Lucky on 12.16.17 at 11:07 pm

So it isn’t just those 4 ETF’s that you need as Garth mentioned a while back. The blog now is basing posts on ‘sector based ETF investing’ to improve diversification (hmmmm, not just about just a few overall asset class ETF’s that will do it?). Anything is better than just a house I suppose.

For example, XLV (healthcare SPDR) is one of ten SP500 Index sectors you may already own through any large cap US ETF you have…to implement Doug’s strategy maybe sell a little of the current large cap and consider adding into XLV (or some other diversified healthcare ETF).

Sector based investing can be a bit tricky but hell it’s all “researched” (i.e. “educated”, hahaha!) guesswork anyway. One thing we know is that people will put there money somewhere, so buy some, let it ride & hope you’re right.

#48 Entrepreneur on 12.16.17 at 11:08 pm

“Older people…expected to double” and health. I try to stay away from drugs of all kinds. More into what Mother Earth gave us for medicine. Right now drinking my own picked rosehip tea (many benefits) and more water (a cup of water in the morning, each before a meal, a cup at night). And don’t sit still too long, keep busy.

Debt is okay only for a short time (for businesses) but for a long duration it is dangerous (mortgages). And when most people are trapped (in that one avenue) then the powers above are in control of their thinking/buying/creativity. Not much room for what is right for the basics of life and for the environment. And throw in taxes on taxes.

Respect our bodies/mind, respect each person, and respect the earth.

#49 Vigo the carpathian on 12.16.17 at 11:29 pm

#35 flop

Thanks for all your posts.

1772 55 st.

Sept 21 1,288,000
Oct 16 1,175,000
List 1,099,000

Sold 1,070,000.

#50 not so liquid in calgary on 12.17.17 at 12:04 am

19.5 years ago, I quit smoking. When everyone was taking Zyban to quit, it was probably actually, Wellbutrin (so my doctor said).

one month on this wonder drug and have been smoke free since!

#51 Goldenboy on 12.17.17 at 12:07 am

Thanks Doug, really like your reasoning and seems you think “Outside the box” which I’m a fan of. I build assisted living homes when I was in construction and saw first hand the growing market for an aging population, just a sad reality we’ll have to live with. Really liked your article on the Chinese stock market a while back too, very informative. I understand a diversified portfolio and know it’s the way to go, but I also believe that the block chain is here to stay, tulipcoin mania or not. It’s a bubble now, but crypto’s will change our financial system forever. Question is, which one will survive? the people making health care stocks go up right now will never accept the change or reality of Chrypto’s, but the younger generation is, this is an interesting time to live, decisions, decisions. I want to hear more about where you think this’ll end up

#52 Big Daddy on 12.17.17 at 1:17 am

With the $cdn falling over the past couple of years under Trudeau and that it is forecast to continue to fall under Trude-hole. Can investors have to $1.30 for a us fund and wait years while making nothing to be made whole. Buying USD is a world of hurt for the vsn who tries to diversify. Hard to lose thirty percent on your first trade .

#53 Ponzius Pilatus on 12.17.17 at 3:08 am

Doug,
Obviously, you are a ladies man.
But will you still marry a wall flower like me.
I just love your sexy graphs.
Garth could be the best man.
He’s a manly man.
Drunk.
Not sure where I’m going with this.
Smokie, take over.

#54 Where's The Money Guido? on 12.17.17 at 3:22 am

Re: #67 Hockey bags on 12.15.17 at 9:32 pm
#62 the other shoe
BC RE specers beware, Hulk Horgan has you in his sights. Bring on Feb. skip to the 8min mark:

https://omny.fm/shows/the-jon-mccomb-show/premier-john-horgan-on-his-site-c-dam-decision-and

What a clown.
I thought the “hockey bags with cash” was a hoax that has been debunked by now?
++++++++++++++++++++++++++++++++++++++++
I was at the Hard Rock casino about 5 years ago to watch a football game and watched two mid-30’s ladies come in with beach bags—YUGE, sit down at 2 slot machines and stuffed those machines for the whole game, only stopping to spin the reels every 10 minutes or so. They didn’t even look up to see if they were winning/losing, just sat chatting and stuffing. They were still there stuffing when I left after the game.
I went over and spoke with a security guy at half time. All he said to me is as long as they spin the reels once, they won’t do a thing.
Fast forward to this past September, I again asked a security guy what was up now that the money laundering secret was out and he said they didn’t care, they weren’t doing a thing.
Now I guess they have real cops in there now, maybe. They haven’t said if they put cops in all casinos, hence that comment about Victoria and Kelowna.

#55 Millenial on 12.17.17 at 8:33 am

#30 I’m stupid on 12.16.17 at 7:44 pm

Maybe she didn’t buy the oranges because they were grossly overpriced, and she knew she could get them across the street for under $10. She was going to buy the lottery tickets regardless. If she was hungry and that was her last $14 then yes it would be absurd for her to spend it on tickets, but you don’t know, she might be a millionaire.

I had $20 riding on this past friday’s $60 million draw – didn’t win. But guess what, I made $2600 on Friday at work.

#56 Gravy Train on 12.17.17 at 9:20 am

“The Trump administration is prohibiting officials at the nation’s top public health agency from using a list of seven words or phrases … in official documents being prepared for next year’s budget.

“Policy analysts at the Centers for Disease Control and Prevention in Atlanta were told of the list of forbidden terms at a meeting Thursday with senior CDC officials who oversee the budget, according to an analyst who took part in the 90-minute briefing. The forbidden terms are ‘vulnerable,’ ‘entitlement,’ ‘diversity,’ ‘transgender,’ ‘fetus,’ ‘evidence-based’ and ‘science-based.’

“In some instances, the analysts were given alternative phrases. Instead of ‘science-based’ or ­’evidence-based,’ the suggested phrase is ‘CDC bases its recommendations on science in consideration with community standards and wishes,’ the person said. In other cases, no replacement words were immediately offered.

“The Department of Health and Human Services, which oversees the CDC, ‘will continue to use the best scientific evidence available to improve the health of all Americans,’ HHS spokesman Matt Lloyd told The Washington Post. ‘HHS also strongly encourages the use of outcome and evidence data in program evaluations and budget decisions.’”
https://www.washingtonpost.com

#57 Greg Schnell on 12.17.17 at 9:27 am

To clarify, US investors do care about overturned delivery trucks when the company’s revenue recognition practices indicate fraud. Biovail recognized sales with FOB destination, not FOB shipping point. They attributed their earnings miss due to the delay. In reality, they wouldn’t have recognized the sales as the truck wouldn’t have made it to its destination. The truck delay exposed management’s ineptness and fraudulent revenue recognition practices. Eugene Melynk, Ottawa Senators owner, was subsequently banned from running public companies for 5 years.

#58 Pillboy on 12.17.17 at 9:37 am

Health is still a person’s most important asset. Don’t base all of your decisions around retirement, because chances are, a fair number of us won’t make it that far.

It’s a fair question to ask where the money to fund medicines will come from. Everyday I deal with medications that cost about $10K per month per patient, which the government pays with its tax base. How is this sustainable? On a per milligram basis, I can name medications cost more than precious gemstones.

The one trend I do see occurring and being exacerbated is drug shortages worldwide. You tell investors not to put all their eggs in one basket, but we’ve gone that way with medicines. A huge manufacturing base for pharmaceuticals is actually in Puerto Rico, which caused a lot of issues recently which we’re still recovering from. Some years ago problems at a sole-source Sandoz factory in Canada resulted in shortages of critical medicines for pain and procedures.

We really should encourage the biotech industry to set up shop here, but that begins with years of pre-planning, starting with encouraging STEM education.

#59 For those about to flop... on 12.17.17 at 9:56 am

#49 Vigo the carpathian on 12.16.17 at 11:29 pm
#35 flop

Thanks for all your posts.

1772 55 st.

Sept 21 1,288,000
Oct 16 1,175,000
List 1,099,000

Sold 1,070,000.

/////////////////////

Hey Vigo,thanks for your help.

People want to know what’s going on and I try to provide a service to the best of my ability.

Now let’s get to the ugly reality of my posts.

These guys paid 1.14 in May 2016.

If your sold number holds at 1.07 ,that is a roughly 6.5% loss and I will go easy on them because it is down towards the bottom of the ladder ,and say 12% loss after expenses.

Roughly a 140k loss on an investment that a lot of people seem to think is can’t lose.

Once again thanks and I will file it away and present it as CONFIRMED PINK SNOW in about 3/4 months when the assessment database is updated,although I prefer this pace of reporting.

House sold last week.

What did it go for?

None of this waiting around,much easier for people to make timely decisions.

Anyway Vigo the carpathian enjoy the rest of the weekend,Flop the carnivore…

#60 TnT on 12.17.17 at 10:40 am

Thanks to Price History, we now we see the pain….

Check the price history and the following math….

471 Kingswood Rd, Toronto
https://www.mongohouse.com/soldrecords/5a2f4dd05c72300376a30ef7

Sold December 2017 for $875K

Seller bought this in July 2016 for $850K making $25K?

NOPE…..

When the seller bought in July 2016 for $850K (1.5 years ago)
They paid: Land Transfer Tax: $27K
They Paid: Mortgage Interest (avg 1K per month x 1.5 years) $18K
They Paid: Taxes 1.5 years = $5.5K
They Paid: Reno (guessing when I went to Open House) $50K

So.. this seller is roughly all in at: $950,500K

Then Sold for $875,000K – 5% commission = $831,250K means a total loss of …

$950,500 (invested) – $831,250(sold -5% commission)

= $119,250K LOSS in 18 Months….

Not including lost opportunity gains if it was invested in a balanced portfolio….

Ouch!

#61 TurnerNation on 12.17.17 at 10:43 am

As part of my (unbalanced) trading I make a few option trades in XBI.US a star US biotech ETF. Also eyeing HHL health income fund on TSX.

I’ll take only one drug, the only one which works: Antibiotics. Last, took this in 1999 then once in 2016. See ya in 2030 doc.
Drugs kill/harm more each year than….?

Twisted logic: Our health is ensured by adequate vitamins/minerals from good natural food and exercise and sleep. Lack of health may be cured…err I mean treated (Treated) not by that but only via the use of lab made synthetic drugs scantily tested in 3rd word countries (deaths do not count there).

Got it? You must believe in this magic. Just swallow and believe it. May as well try a raindance to the gods also.
(They also treat cancer by injecting nuclear waste into you. Only the strong survive – that’s the point…)

#62 Big Daddy on 12.17.17 at 11:04 am

#56 GT……Trump has thrown a real wrench into idiots like Trudeau who flit around lisping “Climate change….Climate Change” but have zero scientific evidence to back it up. Trump is demanding proof….and won’t accept the crazy rhetoric any more. Good for him.

#63 LivinLarge on 12.17.17 at 11:16 am

“Is the difference between financial success as simple as choosing oranges over lotto max?”…in a word, YES.

This is also an analog to direct investing vs. Index ETF investing with the lotto ticket being the direct investment. Sure, you can buy a ticket because as we all know, “you can’t win if you don’t play” but your chance of winning anything significant is mindlessly small. All those little $1-$5-$10 and free ticket prizes are just tastes to keep you paying.

Interestingly, now that sooooo many folks are addicted to the little tastes and throwing egregious sums at the lottos, it would be the perfect time to treat lotto winnings as the capgains they really are. Tax those winnings like any other cap gains and simplify the tax act. I’m far from convinced that taxing winnings would have any meaningful reduction in the sales of tickets but it certainly would have a very meaningful impact on gross tax revenues and that could sooo facilitate a broad simplification of all other taxes.

I haven’t bought a ticket since about 1983 and the money I have saved had compounded so perfectly since then. I see elderly, including my own family, dropping $20+ per week, week in week out just hoping to get out of their sad financial retirement and it pisses me off. They have nothing but a fixed income and hope and that $100 per month is a meaningful portion of their actual spendable income.

So, tax lotto winnings above $1K and use it to fund OAS or shore up CPP but governments should stop preying on the folks who need the money the most.

#64 WUL on 12.17.17 at 11:29 am

Good morning Doug. A comment if I may. Yes, an aging demographic and burgeoning human population are favourable to investiments in health care. Let’s temper our enthusiasm just a bit though.

1. Less than 1/2 of the world’s population has access to essential health services.

2. If a disease or medical ailment disproportionately affects poor people (try TB), pharma does not work on solutions such as vaccines. What would be the point? No profit there.

3. 100 million people or three per second are pushed into extreme poverty every year because of health spending.

Links?

In the words of our stalwart host with the buff abs and pecs, I am not your librarian.

We do have a growing advantage in Canada however, we can slurp antibiotics and estrogen from birth control pills from our rivers and lakes.

#65 OttawaMike on 12.17.17 at 11:49 am

Or when there is a murder suicide and upcoming scandal with one of those Canadian healthcare holdings:

https://twitter.com/spaikin/status/942140915799298048

#66 LivinLarge on 12.17.17 at 11:51 am

“#56 GT……Trump has thrown a real wrench into idiots like Trudeau who flit around lisping “Climate change….Climate Change” but have zero scientific evidence to back it up. Trump is demanding proof….and won’t accept the crazy rhetoric any more. Good for him.”…….zero scientific evidence???? What evidence do you want? 99.5% of climate legitimate scientists say the research and evidence is there.

Donny barely reads so understanding long term climate change research is soooooooo far beyond him. It can’t even be summarized in 150 characters and Donny only has an attention span of 150 characters.

So, again, just what would scientific “proof” look like? Rising global ocean temps? Yup, got that “proof”, dramatic increases in hurricanes and cyclones? Yup, got that too. Melting polar ice caps? Yup, that too. Crop failures as local weather impacts growing regions? That too.

#67 Vampire studies GMST on 12.17.17 at 12:02 pm

63 large – lotto winnings are simply a redistribution of after-tax income. No cap gains there.

#68 I’m stupid on 12.17.17 at 12:22 pm

#55 millennial

Buying the oranges was a better decision when compared to the lottery. The fact she might be able to get them cheaper somewhere else doesn’t matter.

The odds of winning lotto max is something is astronomically high that it’s a suckers bet. My point was that; the difference between success and failure is based on how many times you make decisions that are advantageous vs. The amount of times you make decisions that are not advantageous.

I personally don’t play the lottery because I don’t like suckers bets. I’m no sucker but enjoy playing if you wish, that’s your decision.

#69 Blacksheep on 12.17.17 at 1:58 pm

Livin #66,

“So, again, just what would scientific “proof” look like? Rising global ocean temps? Yup, got that “proof”, dramatic increases in hurricanes and cyclones? Yup, got that too. Melting polar ice caps? Yup, that too. Crop failures as local weather impacts growing regions? That too.”
——————————-
Shit we humans are arrogant…

Only fools would believe something as dynamic as the earth would ever remain in a fixed state for any length of time, as history has proved, change is constant.

Accepting things change, including the climate, sometimes at quite a rapid rate, (ice core samples) before humans were emitting, any carbon:

Why is humanity outraged when said change, becomes apparent in a single human lifetime?

More importantly (to me), how exactly is my paying ‘Carbon Taxes’ (fuel fee’s, BC) stopping said, natural change?

#70 LivinLarge on 12.17.17 at 4:43 pm

“Only fools would believe something as dynamic as the earth would ever remain in a fixed state for any length of time, as history has proved, change is constant.”…I don’t speak for all hymans but yuo, I am arrogant.

Another one of these “I don’t want it to be true so I’ll drag out the “too complicated to comprehend” explanation” drivel. The global climate while complex, it isn’t all that complicated. Weather changes every hour yet we can forcast the temp next Wednesday with relatively perfect precision. The weather changes but the climate stays very predictable for 1000s of years.

Therein is the perenial problem with the climate change deniers, no comprehension of the differences between “weather” and “climate” and more importantly, how climate impacts weather. Right now our “climate” should be slowly cooling for the next 40,000 years as the earth’s orbit around the sun and tilt away from the sun moves along its precisely known path but by all measures the earth avg temp is increasing. This is just like studying dark matter and dark energy. Neither can be detected yet there is no doubt they exist or the Standard Model” and Quantum Model of physics are simply wrong and since we know that both models aren’t wrong, dark energy and matter must exist just like human created climate change must exist or the climate would be slowly cooling.

As for your question about carbon taxes, I can’t be certain if you are really that naive or that simple minded, carbon taxes don’t change the climate, they are simly the charges yoy pay for screwing it up in the first place. The taxes are collected to pay for the remedial action requird as a result of climate change.

#71 LivinLarge on 12.17.17 at 5:29 pm

Vampire: “lotto winnings are simply a redistribution of after-tax income. No cap gains there.” now I know you at least have a dry sense of humour.

But let me get this straight. I buy a piece of paper for $10 with an expectation or hope of it being worth more in the future than the moment I bought it and when it is then my profit isn’t capital gains?

Righhhhhttt, and my Apple shares that went up and up aren’t capital gains either. I want my cap gains taxes back!!!!