Here's your only safe bet in this sickly stock market – MarketWatch

In this challenging market, investors seem to be looking over their shoulders constantly for fear they will either be buying a top or missing the next rotation.

But while it’s tempting to think that you need to be making big moves right now, churning your portfolio can result in much more pain than gain. So don’t rack up trading fees chasing fads and hoping you’re on the right side of an earnings call. And don’t overlook the low-risk, high-growth potential of what clearly is the best sector on Wall Street right now.

Simply put, load up on health care stocks and let them ride.

Hulbert: A clear sign a market top may be near

(3:30)

Marketwatch’s Mark Hulbert points to activity in hedge funds as a sign that a market top is closer.

I have long been an advocate of health care stocks of all shapes and sizes as a major part of any investing portfolio. Whether you’re looking for dividends and stability in the megacaps or growth in biotechs and medical device companies, there’s something for everyone in this sector.

And when you look at the recent numbers, the power of health care stocks over the alternatives is incredibly stark.

If you’re concerned about the stock market and don’t think there are a lot of good options for new money, I don’t blame you. But here’s why you should look at health care as the No. 1 place for new investment right now:

1. Earnings momentum: Every quarter, FactSet shares a great recap of earnings data and breaks down the market trends over various time frames and across all sectors. But no matter what the category, it seems like health care stocks are at the head of the class. Consider the FactSet report for the first quarter of 2015, which notes that the health care sector trounced expectations with a stunning 86% of companies beating forecasts, with an average earnings surprise of 10.5% on the quarter. Additionally, health care stocks reported the highest raw earnings growth rate for the quarter, as well as the highest growth in sales.

2. Big stocks beat big: Keep in mind that the FactSet data is just for S&P 500 SPX, -0.09%   components. The earnings of some of the biggest stocks in Big Pharma blew the doors off in the first quarter, including Bristol-Myers Squibb BMY, +1.19%  , up 15% year-to-date after big success from its cancer drugs fueled a massive 40% beat of 71 cents in EPS vs. forecasts of just 50 cents and year-ago earnings of just 56 cents. Another $100 billion-plus health care stock that also killed it was Gilead Sciences, Inc. GILD, -0.35%  , which saw a 27% beat as earnings doubled thanks to strong Hepatitis C drug sales. So much for growth only coming from the little guys.

3. Long-term stability: While everyone wants to speculate about what gadget Apple AAPL, -0.01%  will come up with next, the reality is that the future landscape of technology and consumer behavior is wildly unpredictable. But one thing that’s certain is that everyone gets sick and everyone ages — and that means built-in demand for health care stocks. Consider a 2014 report from retirement giant Fidelity Investments estimating that the average 65-year-old couple will need $220,000 to cover medical expenses in old age. As we live longer, we demand more care, and rising living standards around the world mean big bucks for health care stocks.

4. Global growth potential: Furthermore, the continued growth of modern medicine in emerging markets holds big potential. Consider that, according to the World Bank, China spent just 5.6% of its GDP on health care in 2013, the most recent year available. The Russian Federation is a bit better at 6.5%, but India is at just 4.0% of GDP. Compare that with the roughly 10% to 12% that is typical for developed nations including Germany, Japan, Canada and France and you see the tremendous potential — especially considering these emerging markets are still seeing their GDP grow, which will only accelerate gains if this share of spending climbs.

5. Consistent outperformance: It should be no surprise, then, that some of the best-performing funds in the long term have been health care-focused. Take the SPDR S&P Biotech ETF XBI, +1.58%  , which is up 330% since May 2007 vs. 40% or so for the S&P 500 in the same period. Or consider the relatively boring Guggenheim S&P 500 Equal Weight Healthcare ETF RYH, +0.23% which is designed to focus only on large-cap health care and prevent a single holding from ever dominating the portfolio. The Guggenheim ETF is up almost 180% since May 2007. For a plain-vanilla index fund, Vanguard Health Care ETF VHT, +0.24%   is up 130% since May 2007 — more than triple the S&P 500.

Any way you slice it, health care outperforms. Maybe biotech is a bit frothy here, and maybe specific Big Pharma players hold specific challenges in regards to their patent portfolios. But a diversified health care fund for the long-term seems pretty close to a sure thing — so buy with confidence even if the rest of the market seems a bit wheezy.

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Here's your only safe bet in this sickly stock market – MarketWatch