Health Care Investing: Time to Pay Attention

In my 2010 preview, I highlighted health stocks as a group to own.  I mentioned the Health Care SPDR (XLV) as a basic choice, but I have a shopping list of specific names in mind.  These include providers, insurance companies, and health information technology.

With today's Health Care Summit, we can start to visualize the end game.

Not Political Opinion

As usual, I am not writing about the merits of the legislation.  I have my viewpoint, and you should, too, but that is not the subject of my work at "A Dash."  I am trying to do something quite different, and more valuable for investors:  Forecasting the end of the health care debate.

If we knew how this was going to turn out, we might be able to pick the right stocks.  That is the challenge.

My 2009 Prediction

In December, I predicted that a health care bill would pass.  I also suggested that the Democrats would threaten the use of a little-known procedure called "reconciliation." This process requires only a majority vote, not the 60 votes needed to overcome a Senate filibuster.  My prediction was completely accurate — at least until the Massachusetts Senate election.  A bill had passed both Houses, including 60 votes in the Senate, but the bills were not exactly the same.  Before a conference committee could resolve the differences, the Massachusetts election reshuffled the deck.  The situation became very uncertain, with most expecting that no bill could succeed.

Updating the Health Care Prognosis

Today's Health Care Summit was a rich source for news commentary and analysis, but here is the most important fact:  President Obama is playing hardball.

Republicans repeatedly asked him to renounce the reconciliation procedure as a means to pass the legislation and the President would not agree.  I see this as a strong bargaining tactic.  Obama hopes that Republicans will compromise on key points, and a bill will pass with bipartisan support.  If not, he is willing to use whatever tactics are necessary.

Readers can check out my prior article for more detail about this, but there are two basic conclusions:

  1. Some form of the legislation is likely to pass, despite current skepticism.
  2. As this becomes apparent, there will be better buying opportunities for some of the key health care stocks.

When the issue has been resolved, the entire health care sector should trade higher.

[I am currently long THC and RMD in personal and client accounts.]

You may also like

5 comments

  • Tadalis September 15, 2010  

    The pharmaceutical industry placed a big bet on healthcare reform, offering up $85 billion in drug price rebates over 10 years in exchange for what it viewed as significant market expansion consequent to broadened health insurance coverage..

  • Life's Too Good October 11, 2010  

    I wanted to thank you for this excellent read!! I definitely enjoyed every little bit of it. I have you bookmarked your site to check out the new stuff you post.

  • Buy Generic Viagra November 30, 2010  

    What a soothing music it is. Thanks for sharing it with the world. It calmed my soul to no end. Thanks again buddy!!!

  • FTGinvestment.com February 14, 2012  

    Investing Gold or Silver Gold and Silver Spot Trading

    This is my first choice these days. The Commissions expenses are little. Cash are often marketed easily, often through regional sellers or ads or cl. Costs may differ from supplier to supplier with 5% or more. You usually have to pay in cash. Fo…

  • FTGinvestment.com February 27, 2012  

    Use Investment Calculator To Realize Your Retirement Planning

    For today‚Äôs financial planning, retirement income calculation is the usual one. This is useful for creating desirable retirement plan, according to your current financial condition, and the estimated length of time you are still working. Through this m…