If you know almost nothing about investing and are looking to get started with individual stocks, large healthcare stocks are fertile soil to begin your buy-and-hold research. During 1902 through 2012, only the tobacco sector outperformed the healthcare sector in America. Tobacco stocks returned 17% annually, and healthcare stocks returned 13% annually.
The reason why I encourage starting with healthcare rather than tobacco is that: (1) units of tobacco sales decline by 3.5% annually in the United States, forcing the tobacco giants to increase per share growth through stock buybacks, price hikes, and diversification into things like e-vapor cigarettes, and (2) the healthcare industry is growing at 4% annually and may even grow faster than that rate as America ages.
There are only two customary ways that you can run into trouble with a healthcare investment: (1) you can overpay, which is a risk that applies to every possible investment, … Read the rest of this article!