Every Spring I go into my garden and cut away last years' perennials and compost the remains.  Spring tides brings a nice furrow of seaweed and I cover the flower beds and wait for May.  Recessions are times for pruning too.  I was ten years old in 1972, not old enough to understand what was up, but old enough to know what ever it was, it was not good and it was going to be more work for my brother and I.  I point this out because the economy feels the same and the circumstances are familiar. 

On February 15, 2008 I penned "Fuel Price and behavior" and this should be thought of as recessions and behavior.  As we are forced to pay more for fuel, and income gets more scarce what do we prune?  Sure we cut big family vacations (sell Disney and its ilk); mom does not buy as many cloths for herself or family (sell Victoria's Secret and buy Haines); I want to suggest that the healthcare sector is not nearly as safe as you might have come to believe and the senior care sector is the most vulnerable of all.  Yes, I believe credit contraction induced recession is going to force individuals and families to re-evaluate their consumption of it and it will be reduced dramatically. 

The chart below indicates the healthcare sector is performing about the same as the SPY over the past six months with some industry groups doing better (XLE, XLB, XLU, XLP) and others like XLF tanking.  I expect XLV at some point in the near future to start under-performing with the under-performance accelerating into the second half of 2008 and first quarter of 2009.