Paul Tudor Jones likes to describe his approach to managing money as a “broader-than-industry lens.”
And the billionaire investor said that, while he can see many positive trends in financial markets — for example, a recovering economy, changes in employee benefits or trends in technology — he sees no such advances in health care.
“It’s probably the least understood of all the markets,” said Jones, owner of Tudor Investment Corp. and one of the most influential investors in the world. “It’s pretty complex, and the long-term impact of it is both short-term and long-term.”
Jones is one of a number of investors and analysts who have lately found it to be a compelling time to sell stocks. Of the Standard & Poor’s 500 index’s benchmark index of the 500 largest U.S. companies, the top 11 trading at least in part on expectations of improving economic growth have seen their share prices tumble 10 percent this year. A comparison of the S&P 500’s forward price-to-earnings ratio with that of its revenue growth shows a 32 percent premium over the long-term, near the most expensive level since December 2009, according to S&P Capital IQ.
Many U.S. financial advisers have complained that they’re struggling to make money in a market like this, even as they’re increasingly not recommending stock funds. Asset managers are still feeling the blow of their disclosures in 2012, when the Internal Revenue Service proposed $2.65 billion in taxes on returns over the years that were overly optimistic about stock market returns.
Perhaps no place is this a more challenging time than in health care, where even medical device and pharmaceutical stocks are suffering, led by concerns about skyrocketing prices. Drug stocks, on the other hand, are rebounding after months of decline, now trading at multiyear highs.