The slight sell-off today was due to the summer doldrums during a big earnings week. People are hesitant despite all the market noise. But investors are jittery because we are late-market. This earnings season is important, because it sets the tone for the end of the year. Keep your pencil sharp. The heat is off the health sector a bit following rhetoric from Washington against the US healthcare companies last spring. A result of that was a sell-off in health stocks, but earnings reports are coming in robust. He is more confident about this sector now than just a few months ago. It looks unlikely that Washington will push through new health care policies, like price transparency on TV ads. But expect continued volatility. You have to be in health care now given valuations, tech innovations, developing markets and aging demographics.

It's been painful as it consolidates for the past 18 months. They have a hepatitis franchise, an expensive drug, that came off patent. Gilead failed to reinvest those profits, too. Their HIV franichise is doing very well. They acquired some companies, which look promising. The CEO is doing a good job. They are trading 9.5x fowarding earnings. Great dividend yield and balance sheet.

They're a UK medical technology company, 75% in hips and knees. They had hiccups a year ago in their wound management business, but have subsided. He has owned this. He doesn't own it now, because the options market isn't very liquid in the U.S. Also, Stryker is the leader in robotics, and SNN is only second or third, launching in 2021. SNN has similar growth to Stryker. Good to hold.

Abbvie has Humira, an $18-20 billion arthritis drug that will lose patent protection. ABBV bought Allergan under pressure to diversify--they needed to. They at 7.5x earnings with little growth after 2021. The Allergan purchase won't add much growth, but will lessen risk; Abbvie won't need to rely so much on Humira for revenues. The Allergan deal isn't done yet, but he likes it. Likes ABBV's dividend.

It's a machine that makes acquisitions which generate revenues worldwide. However, they lack growth and a presence in oncology though they recenly made an aquisition that can help growth. Expect modest growth, but limited downside too if a clinical trial fails. Good dividend and balance sheet. Good to hol.

How many healthcare stocks should you hold in a portfolio? Worldwise, health care makes up 12-15% of the market, but only 3% on the TSX, and 70% of that is cannabis. Canada has limited choices in health care stocks. A portfolio should hold 10% health stocks, and 15% during volatility.

(A Top Pick Jul 05/18, Up 28%) Anthem is in managed care in health care, dominant in Blue Cross/Blue Shield in 13 U.S. states. It's recovered well since April when the Medicare for all calls were coming from Washington. Still likes Anthem and it continues to do well. It consistently delivers.

(A Top Pick Jul 05/18, Up 3%) One of the world's largest biotech companies. They have 3-4 blockbuster drugs in the pipeline in phase 1 & 2. It's an under-owned stock. Enbrel, their largest-selling drug, is undergoing a parent review. If Amgen wins--which he thinks will happen--then there'll be a 12% stock boost; if not, it will fall 12%. Either way, after this review, Amgen is still worth buying.

(A Top Pick Jul 05/18, Up 37%) It's been his top pick for three years. They continue to execute, like their immunotherapy drug. Trades at only 15x earnings with a good rate of return. The market is focused on their Keytruda therapy which merck is executing well.

Since 2014, management has executed very good 7-9% organic EPS growth while compressing margins on the cost side. Last quarter, though, they had a hiccup with their Watchman device, but the market forgave them because of BSX's track record. Happy to own it. They report next week. If they miss, expect volatility.

He sold it at a 50% loss due to price declines in generic drugs. That deflation has decreased lately, which is sort of good news. One of their big drugs came off patent, too.

AZN has a very deep phase-3 pipeline of drugs being tested and tried. The growth won't kick in until 2021-3. He loves their dividend. They've been shedding assets to focus on less price-sensitive areas. Earnings are 16x, going down to 14x in 2020. This will be a lighter quarter, because they aren't selling as many assets, but he's happy to own this.

One of his favourite medtech names. They lead in robotic surgery. Great organic growth. They're setting up for a great quarter.