damn it! I just lost a whole page of explanations with an unknown keystroke!
I concur with the statement that money is flowing into dividend stocks. A week or so back I posted my observations about money flowing into REITS for that reason. It is a way of harnessing labor to preserve wealth, instead of parking capital in gold to store value (a dying concept, in my opinion). Labor camps would (and in some areas still do) indenture families, sometimes for generations, to skim wealth. Gold has no real value, labor does.
This Bull is past maturity and eventually will correct from overspeculation. I don't see the return of the great depression, just a lot of lost capital. In fact, in some ways I think it will be an amusing hoax perpetrated on the most selfish generation of all time.
Alan Greenspan, for all the bashing I have heard, has warned people too many times, but noone listens. People are buying stocks in companies and they don't even know what products they have or will have. Nor do they care, until it's too late. I am invested in a company that has, after eight years, developed their first product. They're still in the red, but I know the score much more so than most investors. Also, I'm willing to cut my losses, something the average investor knows NOTHING about. That is why all the talking heads were wrong about J6P being the cause of market crashes. The notion that they won't have the discipline to sit through market corrections is bass ackwards. In fact, they don't know any better than to sit through corrections. J6P doesn't know to cut losses and therefore gets left holding the bag (empty of course).
So, where am I going with this? Well, I made the statement that the drug sector will lead. I meant in the next bull market...sorry, that's an important fact I left out. During the mean correction coming up they won't lead; successful dividend stocks will. Every bull market has an industry that leads the pack out of the valley of death. The drugs will lead the next bull market because of demographics (aging boomers who want more), and the ability to really deliver the goods. So you are absolutely correct, as your chart points out, the DRG is still in a downtrend. However, after the market corrects, drugs will lead a rally. Drug companies have full pipelines of innovative products, that really change lives. Whereas, we are more likely to see incremental improvements from other industries (tech, electronics, Auto, etc.). This enables drug companies to maintain pricing power and generate profits! |
