People get sick, even in recessions. Medicare and insurance companies pay for treatment in recessions.

Which helps explain why medical stocks have fallen much less than the market as a whole.
The health care segment of the Standard & Poor’s 500 stock index is down about 30 percent in 2008. Steep though that is, it’s less than any other sector except consumer staples, represented by companies such as Procter & Gamble.

Consumer-staple shares are down by about 20 percent, while the S&P 500 as a whole has fallen 40 percent. Financial stocks have plunged 60 percent.
One could have argued that medical stocks were cheap even before the financial crisis hit home.

Pfizer, which has fallen to $17 from $24 at the beginning of the year, trades for seven times profits and has $25 billion in cash.

True, there is uncertainty about how health care reform in the Obama administration will affect medical stocks.

But the population is aging and getting sicker. Companies will figure out how to make money on the trend one way or another.

The T. Rowe Price Health Sciences fund has lost 32 percent, year-to-date.
Vanguard’s Health Care Fund is down 25 percent.