Cramer: How An Obama Win Would Impact Healthcare Stocks

This week in New York magazine, "Bottom Line" columnist Jim Cramer claims it is possible to make a profit from the market regardless of which candidate takes office this November; the secret is just knowing which sectors will rise and fall under each administration. Here's an excerpt:

Health care's pretty simple. The federal government currently doesn't use its clout as the biggest buyer of drugs to negotiate favorable prices. McCain has made noise about changing that, but it's Obama who wants to beat some serious bargains out of Big Pharma, a move that would theoretically be a disaster for the major drug companies. But the pharmaceutical concerns' stocks have already been pummeled in anticipation of an Obama win, so I'm less fearful of the group than I would be otherwise. In fact, they may be a good play if you believe Obama will win. In 1992, Clinton railed against the drug companies during the campaign but wound up taking little action against them, and they enjoyed a fabulous run during his two terms.

I'd buy Merck and Schering-Plough right now. Two of the most poleaxed stocks, they could be coiled springs that bounce back no matter who wins the election. The health-maintenance organizations have also been knocked down ahead of the election because of price competition. They'll get the ten-count under Obama, who views them as a major obstacle to better, cheaper health care. McCain will revive their fortunes. If you like his chances, you should like WellPoint, Humana, and UnitedHealth Group, too.

Comments

[JohnnyComeLately]

The problem that even Obama is not worried about is the Health Insurance industry. It is complete overhead. Put all the controls on that, or better yet, abolish it and start over.

[william]

AMERICA IS PLAIN STUPID! VIDEO GAMES, ILLEGALS DUMBING US DOWN, POOR SCHOOLING, POOR PARENTING, LITTLE READING, THE WORD "LIKE" & "YOU KNOW" AND "UM", FAT AND LAZY AND POOR FISCAL RESPONSIBILITY ALL YIELD TO THE METALITY OF AN OBAMA CANDIDATE- A CANDIDATE OF CHANGE--A HOLLOWMAN THAT RESEMBLES AMERICA TODAY- OUR SOUL IS BEING STRIPPED OUT OF US AND GIVEN TO THE ARAB FOR THEIR STINKING OIL-- CANNOT DRILL, NO NUCLEAR POWER PLANTS, NO COAL, NO OIL SHALE, NO TAR SANDS--JUST COMPLAINING. AMERICA YOU DESERVE OBAMA -FOOLISH AMERICA

[bearfund]

I'm avoiding the entire sector. I'm willing to speculate on supply, demand, interest rates, exchange rates, and even the weather. But politics is just too goddamn random. If you forced me to buy a health care stock, I'd look at a non-US medical device manufacturer. I wouldn't even consider a US company, no matter what it makes or does, and I wouldn't consider a drug manufacturer. Obama, McCain, Clinton, makes no difference. I might as well call up Vegas and bet on black.

[gordon]

bought UNH today $33, it looks bottomed, cheapest, cheaper than WLP. HMOs aren't going away. You think it's going under p/e 9?

[fxtrader07]

well, i couldn't care less what the scam artist and pump 'n dump hedgie cramer says.
It speaks volumes of investors' education that they still listen to his predictions other than for pure (and poor, btw) entertainment.
want a real money making recommendation in health care , no matter who wins the presidential election: generics, preferably (from a valuation point of view) Mylan (MYL). They will be the first to gain big time when healt care system starts to switch to less expensive drug alternatives. It has happened in Europe, it will happen in the u.s.. and it will happen in the emrging markets, too. sure, there are also generica prucers emerging - but they will have to build trust and confidence first, over a couple of years. until then people even there would perefer established, global players like teva and mylan

[Tom B]

"A CANDIDATE OF CHANGE--A HOLLOWMAN THAT RESEMBLES AMERICA TODAY- OUR SOUL IS BEING STRIPPED OUT OF US AND GIVEN TO THE ARAB FOR THEIR STINKING OIL"

I hate to respond to "ALL CAPS" people, but 1) Obama is an expert in Constitutional Law. The national disgrace sitting in the White House right now probably can't SPELL "Constitution&quo... 2) Mr. Bush is a Texas Oil man 3) and an unsuccessful one at that. He recent begged pathetically for mercy before the Saudi Dictators and they laughed in his face. They understand that the immediate issue with oil prices is the direct result of Bernacke's irrational hatred of the US dollar (slashing interest rates).

[Norman Lepoff, M.D.]

I agree with fxtrader. Cramer is an entertainer and a poor one at that. He is an extremely poor stock picker and investor. Nonetheless, government intervention does not help anyone but those on the government payrolls. Considering that Rev. Wright is Obama's mentor and hero, that seems to say it all.

[Brian27]

If Hillary care had passed the pharma stocks would have been killed. The only reason they rallied in the 90's was the death of Hillary Care. Only Cramer thinks that the run in pharma would have happened if Hillary care had passed.

If Obama care passes the pharma stocks get killed. If it doesn't there will be a run

[Tom B]

Pharma's troubles are more about an imbalance between new drug discoveries and expiring patents--and subsequent slow FDA approvals-- than who's in Washington (within reason). Barr had a SAFE morning after Pill they wanted to go over the counter with and the kooky REPUBLICAN FDA slowed it down-- not the Democrats.

[bill d]

Just read where the Saudis will increase 300,000 bbls a day.
Keep laughin.