So the stock market reacted to the passage of health care reform with a big yawn. The only way...

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Jake Huneycutt Comments (1208)
 
I agree with his major conclusion that you should keep ideology and politics out of investing --- those who mix the two perform very poorly over the long-run. However, I can't agree with his secondary conclusion --- that the market going up means that the healthcare legislation will be good for the economy (or even that it's perceived to be good).

Rather, this highlights a principle that too many investors often forget --- the stock market's greatest enemy is uncertainty. There's nothing that scares people more than uncertainty. The insurance companies will be near-term beneficiaries of the legislation, rather than losers (as they might have been under a universal health care reform). Now that the market perceives them to be winners and the uncertainty is removed, it's only natural that the prices would start rising.

All the same, I'd still keep away from the insurers. I believe it's completely possible that they will do well over the next several years, but there are still too many uncertainties from the legislation that the market might not be anticipating --- including a potentially successful Constitutional challenge to the "mandatory insurance" provisions.
23 Mar 2010, 02:56 PM Reply Like

Nathan W Martin Comments (87)
 
It seems to me that a lot more people would've participated in this Bull Market had they set their ideologies aside and let the run in stocks do the talking.
23 Mar 2010, 02:57 PM Reply Like

OptionManiac Comments (3097)
 
Let's face it, the market does better under a Democratic president as opposed to a Republican.
23 Mar 2010, 03:13 PM Reply Like

GrowthStockBob Comments (7)
 
There has been some research to show that over the decades, there's actually little difference in market performance relative to which party is in the White House.
23 Mar 2010, 03:27 PM Reply Like

Neil459 Comments (2640)
 
But the market does respond to interest rates and debt, which are both much more predicable now. We know the direction, just not the timing.
23 Mar 2010, 05:05 PM Reply Like