Recent job growth is overwhelmingly concentrated in healthcare services (83% of new NFP jobs) for an aging population. This, combined with an AI capex bubble, reveals a non-dynamic, 'K-shaped' economy where 'Main Street' stagnates and growth depends on narrow, unsustainable drivers.

A paradoxical market reality is that sectors with heavy government involvement, like healthcare and education, experience skyrocketing costs. In contrast, less-regulated, technology-driven sectors see prices consistently fall, suggesting a correlation between intervention and price inflation.

Despite biotech comprising a significant portion of benchmarks, generalist managers consistently remain severely underweight. They perceive this as risk-averse, but it actually exposes their funds to massive tracking error and unintended risks by forcing them to be overweight in other healthcare sub-sectors.

Beyond the crowded AI trade, smart money sees opportunity in overlooked sectors. These include healthcare, which is at a 30-year low in relative valuation, and companies serving the middle-income consumer, a segment poised to benefit from upcoming tax reforms.

The S&P 500's high concentration in 10 stocks is historically rare, seen only during the 'Nifty Fifty' and dot-com bubbles. In both prior cases, investors who bought at the peak waited 15 years to break even, highlighting the significant 'dead capital' risk in today's market.

Historically a Democratic focus, drug pricing policy has been co-opted by Republicans, making it a bipartisan political issue. This alignment creates a stable policy overhang and sustained uncertainty around pricing and innovation, deterring generalist investors regardless of which party is in power.

Healthcare prices have risen 2.5 times more than groceries, but consumers are less sensitive to these increases. Unlike the frequent, tangible cost of eggs, infrequent medical bills make people "numb" to rising prices, masking a major source of inflation that policy changes can suddenly make visible.

When a few high-flying stocks like the 'Mag-7' dominate the market, capital is pulled from other sectors, creating cyclical valuation discounts. Stable industries like healthcare can become as cheap relative to the S&P 500 as they were during the 2000 tech bubble, presenting a contrarian investment opportunity.

The past few years in biotech mirrored the tech dot-com bust, driven by fading post-COVID exuberance, interest rate hikes, and slower-than-hoped commercialization of new modalities like gene editing. This was caused by a confluence of factors, creating a tough environment for companies that raised capital during the peak.