Actionable market insights that have outperformed the S&P 500 for over 26 years.

The healthcare sector has been languishing during the past three years. Returns were close to zero in 2023 and 2024. Some life returned in 2025, but the return for the entire three-year period was far below the rest of the market. The wake of this abandonment has left this sector undervalued and replete with investment bargains. 

During this time, the market has been enthralled with the AI boom and ramping up the stock prices of the companies in the race to build data centers.  As these companies have become extended, Sound Advice has continued to recommend staying away from the hyper-scalers while investing in unappreciated companies and sectors that will benefit from the proliferation of AI to enhance innovation and production while streamlining costs. Healthcare is clearly one of those sectors.

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In May, it was reported that sharp increases in energy costs caused by war in the Middle East caused inflation to spike to 3.8 percent, pushing the inflation rate even higher above the Federal Reserve’s targeted mandate of 2.0 percent. Wholesale prices also increased, indicating more inflation is in the pipeline. In response, yields on Treasury securities rose, with the yield on the 30-year Treasury bond climbing above 5 percent to its highest level since 2007. 

Traditionally, stubbornly high inflation and rising Treasury bond yield is very bad news for stocks. However, the market was not rattled. Why not?

Last month we advised not to get sidetracked by the spectacle of the military activities and lose sight of the major trend, which is revealed by our Diffusion Indexes. Since then, the S&P 500 rose to record highs.

We rely on the Sound Advice Diffusion Indexes (page 9) to identify business cycles because they have an accurate track record of predicting major stock market trends for the last 50+ years. They work by observing changes in the most sensitive leading and lagging economic indicators that lead to shifts in interest rates...

It has been a wild month with the first significant downdraft since last April. The Sound Advice portfolio did well in the first quarter, thanks primarily to our energy holdings and downside hedges, but the overall market did not.  It was very easy to get sidetracked by the spectacle of the military activities and lose sight of the major trends.  When the activities die down in Iran, oil prices are certain to drop, perhaps not to the low levels seen before escalations, but substantially lower than they are now...