Thursday, January 17, 2008

Hiding in the Healthcare and Consumer Staples Bushes

Last night's Market Forecast dinner here in Boca Raton produced the first full blown bear. So, when panelist Jeff deGraaf (formerly with Lehman Bros. now with Ed Hyman's firm, ISI Group) described his market view as being totally bearish, it was a breadth of fresh independent thinking.

Combining both fundamental and technical analysis (he holds both a CFA and CMT designation), Jeff's overall market conclusions differ from mine but that's okay, even good. I have a great deal of respect for Jeff and look forward to exploring his view this evening at my next Market Forecast dinner in Naples.

While Jeff and I may disagree on the macro picture, we are in complete alignment on two economic sectors - Healthcare and Consumer Staples. As the above chart shows, these traditionally defensively viewed sectors have far outperformed the broad market since the summer of 07.

Investment Strategy Implications

Be you bull or bear, Healthcare and Consumer Staples (including Global Consumer Staples - KXI) appear to be sectors well suited for the investment times. For bears like Jeff, they are solid defensive plays. For correction bulls like me they are appropriate for the corrective times I believe we are in.

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