Decline in Housing Good For Pharma?

According to same bizzare coincidence there seems to be a negative correlation between housing starts and the stocks of pharmaceutical companies.

Could Decline in Housing Help Pharma?
Tuesday September 19, 11:36 am ET
Lower Housing Starts Could Boost Pharmaceutical Stocks, Harris Private Bank Says

NEW YORK (AP) -- Here's a group of stocks you may never have thought could benefit from a housing slowdown: Pharmaceutical companies.

Stocks such as Pfizer Inc., Johnson & Johnson and Merck & Co., are positioned to benefit by a decline in housing starts, Jack A. Ablin, chief investment officer of Harris Private Bank wrote in a research note Tuesday.

He found that over the last 10 years, the relative performance of pharmaceutical companies has had a negative 79 percent correlation to housing starts. The trend of sharply declining housing starts should mean rising pharmaceutical stocks, he wrote.

"Perhaps it's the defensive nature of the group," he wrote. "As if on cue, pharmaceutical stocks have already begun their outperformance."

Calling the pharmaceutical stocks "cheap," Ablin said Harris expects health care and accelerating pharma stocks to outpace the Standard & Poor's 500 over the next 12 months.

The pharmaceutical sector has been dragged down over the past year by a series of scandals, lawsuits and management upheaval.

He only goes back 10 years which isn't enough to draw any reasonable conclusion.

Regardless I just happened to buy some pfiezer in my Roth IRA yesterday. So I hope Albin's theory is correct! Pfiezer also happens to have a 3.4% dividend which isn't half bad.