Germany's, Merck KGaA is buying Millipore for $6 billion in cash. In addition, OSI Pharmaceuticals received a $3.5 billion hostile cash bid from a Japanesese firm. In the past year the vast majority of cash takeovers have occurred in healthcare. The reason is that healthcare companies have clean balance sheets, generate strong cash flow and trade at reasonable valuations.
Most investors would rather own economically sensitive stocks because those are the stocks that are supposed to do well at this point in the cycle. No matter that they trade at much higher valuations and many companies are still over leveraged and should raise capital. Healthcare stocks are not supposed to be owned at this point of the cycle.
I don't care what stocks are supposed to be owned right now. I would rather be where the cash buyers are. The vast majority of my long exposure is in healthcare.