WEEKLY WISDOM

⚡ LIGHTNING ROUND

📉 Market Pulse: XLV is down 42% vs. SPX since Jan 2023. That’s your contrarian setup.

💡 Shrewd Tip: Follow sectors that investors hate—by the time they love it again, it’s too late.

🔥 Quick Win: Add UNH to a watchlist. If it starts to form a base, start building a position in tranches—10% at a time.

INVESTMENT OPPORTUNITY

Healthcare Is Getting Crushed

Here’s How to Play It

Healthcare is getting smoked.

You might expect a sector such as biotech or semiconductors to swing wildly. But healthcare?

This is the “safe money.”

The steady Eddie.

The forget-about-it stuff and thank me later, dividend-paying recession play.

And yet, here we are: the healthcare sector — via the XLV ETF — has underperformed the S&P 500 by a staggering 42% since January 2023.

That’s a compound annual underperformance of -24% per year.

In a sector that’s supposed to be defensive.

That’s not just bad.

That’s portfolio-wrecking.

The Scorecard

Healthcare vs. The Market

Let’s run the numbers:

• S&P 500 (SPX): +6.7% YTD

• XLV (Healthcare ETF): -3.5% YTD

• Relative performance since Jan 2023: XLV is trailing SPX by 42%

This isn’t just underperformance—it’s decimation.

Why Is Healthcare Getting Crushed?

Short-term headlines and long-term regulatory risks

Let’s break down what’s behind this unexpected rout:

1. Healthcare Is Out of Fashion

• We’re in a tech bull market.

• AI, chips, and mega-cap growth stocks are soaking up investor capital.

• Defensive plays like healthcare are being left in the dust.

2. The UNH Domino Effect

UnitedHealth Group (UNH), a 5.4% chunk of XLV, has been a disaster:

• Cyberattack: UNH’s tech systems were breached, paralyzing key operations.

• Regulatory hits: Medicaid redeterminations are reducing payments.

• Controversial image: The CEO was murdered — and disturbingly, many celebrated online. That’s how hated health insurers have become.

• Stock down 54% from its peak.

This is the Microsoft of healthcare. If UNH is struggling, everyone else feels it.

3. Regulatory Pressure on Insurers

Medicaid programs are being tightened. Some states are requiring recipients to work or volunteer to qualify. That’s reducing enrollment and profit margins.

And let’s be honest: political tailwinds are blowing against big healthcare.

4. XLV’s Concentration Risk

More than half of the fund is in just 10 names:

That’s 55.61% of the fund in just 10 names. If one breaks (like UNH), the whole sector takes a hit.

So… What Now?

Let’s get to the good part—what you should do.

First, Don’t Be a Hero

Trying to catch falling knives rarely ends well.

Yes, this sector is hated. Yes, it's underpriced. But bottoms aren’t made on hope. They’re made on:

• Puke-worthy selling

• Flatlining prices

• And then... a slow, unnoticed turn

Here’s the Playbook

1. Watch the XLV/SPX Ratio

Wait for this trend to stop getting worse.

When XLV starts to flatten or slowly tick up vs. SPX, that’s your signal the worst is over.

2. Look for Basing Behavior

You’ll see it in the charts: weeks or months of sideways price action. That’s accumulation. Smart money buying while retail is asleep.

3. Be Ready to Act, But Not Yet

We’re not in the bottoming phase yet. More pain could come.

But bottoms are where generational wealth is made—if you're patient.

Want a Single Stock?

The Case for United Healthcare (UNH)

Yes, it’s messy.

• Cyberattack damage.

• Regulatory pressure.

• A PR crisis.

But here's what most miss:

• UNH is a near-monopoly in American healthcare.

• It’s one of the only stocks in the world with real network effects and pricing power in healthcare.

• And it’s trading at a 54% discount to its high.

This is what Warren Buffett means when he says:

UNH is hated right now. Which means it might be exactly what a shrewd investor needs.

Want the Sector?

Watch XLV

XLV gives you exposure to:

• Big Pharma (Lilly, JNJ, AbbVie)

• Health insurers (UNH)

• Surgical tech (Intuitive)

• Diagnostics (Thermo Fisher, Abbott)

It’s a diversified way to play a sector rebound.

Just remember: 55% of XLV is top-heavy. You’re not buying 65 stocks. You’re buying 10 with window dressing.

But that’s not a bad thing—those top 10 are world-class operators with fat margins, strong moats, and real free cash flow.

When this ship turns, it could turn hard.

Bottom Line for the Shrewd Investor

Healthcare is hated

It’s cheap.

It’s down big while the rest of the market is up.

That’s exactly where the best trades are born.

But don’t chase. Track. Watch. Prepare.

Here’s how to play it:

✅ Add XLV and UNH to your watchlist

✅ Set alerts for basing price behavior

✅ Track the XLV/SPX relative strength line

✅ Build a plan. Be ready to act.

P.S. If you’d like us to break down your portfolio or ask a question, submit yours here: https://shrewdinvestor.com/roastme

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The content provided in this newsletter is for informational purposes only and should not be considered as specific advice for any specific individual. The information is prepared by knowledgeable individuals and is not written by certified tax professionals or investment advisors. For personalized advice tailored to your unique financial situation, consult with a qualified tax professional, financial advisor, or attorney.

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