Monday, July 25, 2011

Someone forgot to tell the stock market that "Obamacare" was going to put an end to our health care system as we knew it, turning it into a socialist's dream.

The chart (click on it to make larger) shows price returns since last October for the S&P 500, the health care sector (XLV ETF), and six major U.S. health care provider companies. Note that the stock market in general (S&P 500) is up 15% and the health care sector has appreciated by about 17% in that time, and then you have the stocks of the health care providers.

These are the companies that collectively fought hard to defeat Obama's reform efforts, spending many, many millions to distort the truth and spread a campaign of disinformation and propaganda. Since October, the stock prices of these six companies have far exceeded the return of both the stock market and the health care sector in general. Wellpoint's stock turned in the worst performance at +37% -- which is still a whopping 20% above the HC sector and 22% ahead of the S&P 500 index! The other five stocks all surpassed the +40% level, with Coventry topping out at near +80%, a percentage more than 5 times greater than the S&P 500's return.

I know a thing or two about the stock market and one thing investors are very good at doing is discounting the future prospects of companies and industries. Market players look a few years down the road when assessing companies and price the stock accordingly today. If the fortunes and fate of companies like Aetna, Humana and Cigna were truly in trouble, were certain to be significantly compromised given the massive "pinko" changes to come from "Obamacare," then you could bank on the fact that the respective stock returns of these companies would've severely trailed the stock market since last October. But instead we have quite a different picture, to say the least.

What does this mean? It means Wall Street investors -- hardly a naive and/or dumb crowd -- have known for quite some time that all the crap hoisted against health care reform has been a bunch of hooey and lies. It also means that Obama's health care reform measures are hardly comprehensive or possessing much "teeth" -- again, not a surprise, something we've unfortunately known all along to be the case. Yet the blabbering hysterics from the opposition would have you think Obama succeeded in pushing through extraordinary, far-reaching provisions. Nonsense.

You may not like Wall Street, the stock market, the world of high finance, etc., but make no mistake, when it comes to seeing through all the BS and representing reality and facts, you'd be hard-pressed to find a better vehicle representing this than stock price behavior.

The bottom line is investors have been voting with their hard-earned $$$ that these companies are going to do just fine over the next several years.

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