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New To Investing? Keep An Eye On Healthcare And Tech Stocks

| by Paul Brown

It is no secret that employment figures have fluctuated dramatically over the past eight years. Certain industries like technology, healthcare and energy have risen up from the shadows and revitalized entire areas of the country, while once-reliable sectors, primarily rooted in manufacturing, have gone down in flames and taken entire cities with them. For people whose sole means of earning income has been through wages, the last few years of the Bush Administration and the first few years of the Obama Administration must have made for a bumpy ride.

However, for a growing number of Americans, wages are not the be-all and end-all of generating income. ‘Investing’ can be a scary word and an even scarier process, but over the past few years it has been a surprisingly strong way to make money. As of early 2014, corporate profits were up nearly 130 percent from where they were at the end of 2007. That massive upswing resulted in stock prices doubling from their end-of-Bush Administration totals. 

The reason why so many are apprehensive when it comes to trying their hand at investing is because of how overwhelming the process appears to be. The key is to identify areas of prospective growth and really zero in on untapped sectors with room to develop.

The tech sector, with a particular emphasis on robotics, has fascinated investors for some time. This budding industry is a “billion-dollar untapped market,” according to some experts. Videos and reports have surfaced concerning super-intelligent robots that can play chess, follow commands, and perform many human activities. While these videos are entertaining and have captured the imagination of the public at large, there are some obvious unique possibilities that such advances could result in.

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According to Money Morning, “one of the industries that has adopted robotics the fastest is life sciences, which posted a 73% net gain in terms of units ordered in 2013.” Overall, 26,000 industrial robots made in America were shipped around the world. These were worth a combined $1.57 billion, according to the Robotic Industries Association.

Money Morning’s  Chief Investment Strategist Keith Fitz-Gerald has categorized people into two groups – those who believe this sector will play a “critical role in the years to come” and ”others [who] can’t see the light and are ignoring it.”

"There is not a single industry or product that will have a more profound impact on our lives, our future, and, of course, our money," Fitz-Gerald said

Even outside of robotics, the tech industry has seen some notable highlights over the past few years. When Facebook opened with a peak market capitalization of over $104 billion, there was a lot of talk about how it was on the forefront of a bubble that was on the verge of bursting. On the first day of trading, Facebook closed at $38.23 and was trotted out as a shining example of why its industry wasn’t built to last. As of Nov. 2014, the Facebook stock is hovering around $62 and the company has never been stronger.  Tech is, was and will continue to be a smart place for new investors to put their money.

Another promising industry? Healthcare.

As a result of the – relatively – new Affordable Care Act (also known as Obama Care), the healthcare industry is completely redefining itself. According to Yahoo Finance, “the health-care sector is up 19 percent (over the past year), and it's up nearly 2 percent in the past 30 days alone.” Mind you, this isn’t a new development. People have been expecting healthcare stocks to take off for a while now. According to the Wall Street Journal, in the 12 months ended April 30, healthcare stocks in the S&P 500 index gained 22.7%, beating the overall index's 17.93% return. Healthcare stocks made up 13.2% of the S&P 500 index's market capitalization as of April 30.

The Wall Street Journal also reports that the Affordable Care Act is expected “to spur more business to medical-device, pharmaceutical, and other health-care companies.”  America’s favorite financial news source isn’t the only one excited about the healthcare industry. Gina Sanchez, founder of Chantico Global, believes that healthcare is definitely an industry to keep an eye on.

"If you look at individual names in the health-care market, there are certainly opportunities there," Sanchez told Yahoo Finance. "We might see some bottoming in the biotech industry. We're finally seeing R&D pick up and some new drug approvals coming on to the market. That would be positive."

The obvious question many investing newcomers have is: How do you start?

According to SureTrader, a company that specializes in making the process easy enough for everyone to be able to participate, the key to investing in healthcare companies is finding ones that create “safe and efficient” products.

“The first step for investing in any kind of company is to determine whether or not a profit can be made and how much profit you expect to make,” SureTrader representative Khyle Higgs told Opposing Views. “The Healthcare Industry is one that always needs investments as research is ongoing. But with healthcare investments, it’s best to investigate and ensure that the healthcare company is one that creates safe and efficient products. Lawsuit settlements for healthcare companies are often costly and work against the success and reputable name of the company, or product itself.”

Much as is the case with other stocks, the historical success of healthcare companies also offers some insight into how they will perform in the future.

“There are a number of successful healthcare companies that are thriving in the market,” Higgs continued. “The best thing to do is to look at the company’s past performance, especially its recent stock trading performance (if public).”

If tech and healthcare are outside of your comfort zone, there are some interesting classic investments that are making something of a comeback. As the economy has improved, housing has seen a real resurgence. 

"Look, the Federal Reserve has won,” MSN Money writes. “Home prices [were] going up too high and now they have cooled off while demand has stayed pretty consistent – but supply has fallen behind.”

In layman’s terms: In many parts of the country, it’s a seller’s market again.

Retail is another industry that has experienced resurgence in recent years. When the economy was at its low point, consumers could not afford to shop. Now that purchasing power is (slowly) returning to old levels, stores are experiencing a revival of sorts.

When it comes to minimizing investment risk and potential losses, Khyle Higgs of SureTrader offers the following advice:

“Investors have to monitor the performance of the companies, commodities, and industries that they have invested in. News, quarterly reports, any kind of information about a company that is released can affect how other investors act towards stock and thus, your investment is affected as well. It’s best to keep an eye out for spikes in profits, slumps that lead to losses, and information being reported about the company or industry,” he says. “Investors also have to know the exact amount that was initially spent on that investment and if the investment was stock, as well as the price at which it was bought. Knowledge is power when it comes to investments, and that’s the best way to minimize risk.”

Regardless of what industry you choose to invest in, everyone’s key take away from the past few years should be that wages are not the only way to make money. Jobs come and jobs go – a lesson much of the U.S. population learned the hard way. Having a secondary source is no longer a luxury, it is a necessity.