A Recession-Proof Sector

Health care stocks are traditionally countercyclical. This isn’t surprising since consumers tend to cut back on everything else before sacrificing medical care. It’s no accident that biotechs in the Breakthrough Technology Report portfolio have done well.

There is, however, another aspect of companies that control breakthrough medical technologies that makes them immune to downturns: Their initial customers include extremely wealthy early adopters.

The number of high net-worth individuals — people controlling at least $1 million in assets excluding primary residence — has been growing dramatically for decades, far outpacing inflation. They and their immediate families comprise a population that may exceed 25 million people. Spending on luxury items by HNWIs and family members remains strong. While the biggest concentrations of HNWIs are still in North America and Europe, the fastest growth, by far, is in China and India.

The market segment that continues to buy Ferraris, yachts and private jets will also buy regenerative therapies for themselves and their loved ones. HNWIs are largely immune to the big economic fluctuations. When stem cell therapies bestow the power to rejuvenate hearts, livers, skin and cartilage, even at sky-high prices, there will be millions and millions of happy buyers.