Tuesday, October 25, 2005

The Peridot Capitalist--UNH and PHARMAS

The Peridot Capitalist

Chad noticed a 21% premium increase by United Healthcare. He suggests that UNH will increase its earnings at a double digit pace for as long as Washington does not pass healthcare reform.

My daughter has owned UNH for more than 20 years. She has made 150 times her original investment. Therefore we are biased and want to believe the good record will continue for ever.

However, it is my belief that it is finally time to buy the big pharmas. Load up now. It may take a few months to see good profits but great profits will be made over the next several years.

Traditionally, there is an inverse relationship between the buyers and sellers of prescription drugs. My daughter will continue to hold UNH because it is an outstanding company. However, new money, if and when any arrives, will be invested in pharmas and not in cost containment vehicles.

This cycle may be different but, historically, the expansion phase of the economy has been a tough time for many sectors. It has usually been a good time for consumer staples and pharmas.
Vitaliy Katsenelson and Bullbearings join me in anticipation of big growth in these investment areas.