Donald Johnson

Hospital Stocks Down on Rumored Medicare Cuts

The question remains, which rumors?

Obama’s Health Insurance Plan Is No Panacea

ObamaCare will increase the cost of health insurance to enrollees for several reasons.

First, if the plan subsidizes health insurance for the 6 to 8 million uninsured American citizens who aren't eligible for existing programs and can't afford basic catastrophic plans, the plan will cost billions. This cohort tends to be uneducated, unemployable and, most important, chronically ill. They would need a lot of attention when they first got their coverage and would cost more to insure over time than most people.

Second, if Obama's public option health plan, which I call the Government HMO (GHMO), is enacted, it would initially lower premiums in an effort to drive private insurers out of the markets. After private insurers are gone, Congress would mandate that the plan offer more benefits, raise premiums and taxes on non participating employers and the rest of us and ease initial limits on access. We'd be in an expensive, low access single-payer plan, which is Obama's objective.

Third, if Congress goes the Wal-Mart employer mandated coverage, it will mandate all kinds of benefits at the behest of lobbyists and campaign contributors and raise premiums and taxes.

The literature is beginning to show what I've been saying for years. Most expensive preventive care is covered by insurers because the states mandate that coverage at the behest of providers who support politicians' election campaigns with contributions. Only a small part of preventive care cuts costs for the long term, and very little if any cuts costs for the long term.

Because preventive care contributors have the attention of members of Congress and presidential candidates, it's like ethanol, basically an expensive scam.

I've been writing and blogging on health care and health insurance businesses and economics for years at businessword.com.

It is amazing that people who claim to be health insurance experts continue to say there are 46 to 50 million uninsured. That's a number inflated by the government officials who believe in health care reform and publish it to help providers turn a small problem into a crisis. Their gambit worked and will give politicians and some providers' trade associations much more power, but it will cost everyone under 65 trillions.

Hedging Against ObamaCare: Potential Hedges Against Health Insurance Reform

Ozzy,

I agree that we don't have a health care crisis. Obama has created a crisis in an effort to get his ObamaCare enacted. People are beginning to doubt his solutions more and more.

What we have is an education crisis. Uneducated people live unhealthy life styles, don't make enough money to buy health insurance and don't know how to deal with providers or insurers. They, do, however, seem to do pretty well when it comes to gaming Medicaid.

If more parents and families valued education and made sure their kids got good educations, more people would be economically literate, understand risks, know how to shop for insurance and providers and make more cost effective health care decisions.

Hedging Against ObamaCare: Potential Hedges Against Health Insurance Reform

I agree that it's almost impossible to predict what will happen to ObamaCare because nobody knows what it will be.

What is clear is that new predictions this week that Kennedy's bill would cost $1.6 trillion over 10 years and reduce the number of unemployed by less than 15 million has given opponents new ammunition. Advocates don't have an answer.

It's also clear that anything Congress passes will be inflationary. And there is no way any of the gimmicks promoted by Obama will cut costs or expenditures.

I've blogged many times over the last six years about ways health insurance markets could be reformed in ways that would reduce insurance premiums without costing taxpayers a dime. But Kennedy and Obama are bent on creating a single-payer system that will attract billions in campaign contributions to the politicians who control health care spending.

Single-payer solutions are supported by about 21% of Americans, but their guys are in power. So who knows how this will turn out. I'm not trading in anticipation of any particular outcome related to health care, but I am trading anticipating more inflation.

Seeking Alpha Partners with InfoNgen to Empower Its Contributors

I've signed up and waiting for InfoNgen to set me up. Looks like a good way to generate a lot more speculative ideas and blog posts.

Candidates to Replace GM, Citigroup in the Dow

Well,

AAPL, NUE, USB and MON didn't make it. It was fun to speculate about which companies would be picked. Thanks for all the comments.

The Manipulation of Gold and Silver Prices

What I see in the article and many comments are failures to understand how commodity markets and futures markets work.

JPM's open contracts mean little because most will be closed before contracts expire. And how much of JPM's holdings belong to its clients? Most, probably.

Speculation drives all markets. Most of the speculation is about supply and demand of a commodity or stock or bond, or whatever. But that speculation also factors in expectations for related markets such as the money and currency markets as well as for markets of competing products. That's why the precious metals markets interact much as the grains and live stock markets do.

It seems to me that the author of the opening post is unhappy that gold and silver aren't going up as much or as fast as they think they should, and he's come up with a conspiracy theory to rationalize his poorly timed trades.

Gold bulls have been spouting this kind of stuff for decades.

That governments and institutions trade commodities is no big deal. They've done it forever. Sometimes they make good trades and sometimes not. Same goes with banks and other institutions and commericials as well as individuals.

Trading gold or any commodity is a very risky business, and if you can't manage your losses you probably should be in money market funds, etc.

Why Google Won't Replace GM in the Dow

Very good piece.

That all Dow companies pay dividends is interesting. That some of those dividends are nominal at best may mean this criteria will be dropped. The weighting problem also is important for the high-priced, volatile stocks.

CAT has been in the Dow for a long time. I can't see adding more retailers other than, perhaps, AutoNation (AN), an auto dealer, nor another soft drink company. KO already is in the Dow.

Candidates to Replace GM, Citigroup in the Dow

I've purchased more than 100 Macs for my business and myself since 1986. Apple is a consumer electronics company, and all consumer electronics, including PCs, have relatively short life cycles and are faddish, in my opinion. Apple's been especially good at anticipating and creating fads in very competitive markets.

At the moment, it's market share is growing in a troubled economy. I think it should be in the DOW because its revenues and profits depend on everyone from teens to presidential candidates, corporations and old folks like me.

As for GOOG, it's selling for 22 times cash flow, it's PE is a relatively high 30 given that its sales are growing only 6% a year, and it depends on advertising revenue. It's PEG is a relatively cheapt 1.07, according to data on YAHOO. The company doesn't provide guidance to investors, and its governance structure is rigged to deny voting rights to shareholders, which, I happen to think is wrong. At some point it will go the way of MSFT.


On May 30 05:20 AM Timeline Strategy Consulting wrote:

> Apple's products 'faddish'? My definition of 'faddish' would be GM,
> cranking out endless undesirable combinations of models that require
> heavy discounts and incentives to sell, all to meet the cost accountant's
> model of 100% factory capacity utilization.
>
> Remember that Apple pioneered desktop computing and operating systems.
> It was the logical successor to the Silicon Valley garage ideal in
> the vein of Hewlett and Packard.
>
> Apple had hard hard times, but unlike GM, revitalized itself by adapting
> its business model to reflect the changing way that customers consume
> media. In doing so, it created a second act that rivals any in business.
> And, this second act also has allowed Apple to return to its first
> act, which is computing and software for the masses.
>
> And now it has completely revolutionized mobile computing.
>
> Maybe you should ask your grandkids.

Caterpillar: A Buy on Further Weakness?

I just noticed I have a typo in the article. The stock closed on Friday, May 22 at $34.31.

Richelson: 100% Bond Allocation Is Appropriate

I started reading Richelson's "Bonds" a couple of months ago.

The book is a very good primer for those who haven't traded bonds or bond funds and includes a great list of web sites that cover bonds and the money markets.

The reason I stopped reading the book is that it ignores or downplays the impact of inflation on bond prices. We're seeing that now as treasuries plunge, pulling down corporates and mortgage-back securities with them.

At the moment, I'm 15% in equities and the rest in FGOVX, BND and money market.

And I'm not sure what to do now that my principal is being threatened. I don't like equities. They're long over due for a major correction. And I don't like money markets or treasuries for obvious reasons.

At this point, it may be smart to short the buck via ETFs, but that move may be over for the time being, too. Gold is touted by many, but it's close to being over bought and is meeting resistance, I think.

Writing covered calls makes sense in bull markets, but with all indicators continuing to point to a correction, this probably isn't the time to initiate new positions. At least, I'm not ready to.

Bottom line. There are no sure bets these days.

The question becomes, what's the best way to keep your powder not only dry, but safe?

Caterpillar: A Buy on Further Weakness?

I assume readers know CAT's fundamentals, which are weak in the face of a weak economy. Yes, a weak dollar helps CAT exports when there is export demand, but with most economies in the tank, how much will a weak dollar help CAT's exports?

Also, please note my links to a more fundamental story at Thestreet.com and here on SA.

I don't see how a week dollar can help CAT as long as its domestic market is so weak. I don't buy the "glimmers of hope."

Short Term Trends Are Not Your Friend

I don't know. A quick look at many charts shows that the money is made after a breakout, assuming that losing trades are closed quickly and winners are allowed to run.

Are you recommending trading against the tape?

Are you recommending trading on intuition about changes in fundamentals only, regardless of the technicals?

What this says to me is that this particular strategy didn't work for you. While there are credible studies that say technical analysis by itself doesn't work for many people, that's not what this case study suggests to me.

The Journalism Bubble

As a journalist, publisher, entrepreneur and long-time media observer and critic, I think it is easy to be self-righteous about how journalists work and what they accomplish. Those who point to reporting on Iraq and Madoff as examples of bad reporting over simplify and repeat complaints they've heard or read.

Those who complain reporters are simply rewriting news releases ignore the economics of journalism. Simply put, rewriting press releases worked for generations. Now, readers can get the releases online.

The economics of the media is that you need the wealth of a "60 Minutes," WSJ, NYT or LAT (historically) to employ journalists who know something more than journalism and spend weeks and months on one story.

The other fact of life is that few readers want such reporting. The biggest mistake an editor can make is to publish a series of articles over more than two or three days. People don't read them. Only panels of judges who grant journalism awards do.

What's the evidence? How many indepth mags are profitable? How many subscribers do they have? Not many.

So entrepreneurial journalism, which I used in the 1960s to make my name and career, is romantic and the ideal, but the market for it is very limited. People who will pay for such reporting and analysis hire highly skilled analysts and consultants to produce such work for a very few eyes.

If you want such "journalism," you buy a few books on a topic, read widely and do your own reporting and analysis. Few want or need such info. and fewer will pay for it.

Evidence? Look at how few pay for subscriptions to the WSJ, Barron's and Morningstar.com. How many buy Value Line and its various services? Thousands, not millions.

So I think Jarvis is training his journalism students to work for the government, hedge funds and market research firms, not for the media.

Agricultural Commodities: The Next Bull Market

Ethanol.