The passing of ObamaCare greatly increases the role of government in our health care. While there may be a few beneficial items in the bill; the vast majority of it will hurt the middle class. Health Care stocks soared immediately after passage because the bill morphed into a gigantic giveaway to the very people the President demonized to get the bill passed. History shows us when the government takes control of private enterprise; markets become less efficient and more costly.
The growth of government in this bill is significant including $500 billion in new taxes. This does not include the billions of dollars in gimmicks and double counting to hide much of the taxes and/or increased debt that will be required to pay for individual and state mandates. The mandate requiring everyone to buy insurance (probably unconstitutional), and the requirements placed on insurance policies will cause premiums to skyrocket and hurt the middle class who will be subsidizing the unhealthy.
In the meantime, the poor will get benefits, the rich will find ways to beat the system, and the middle class will get crushed through higher federal and state taxes, slower job growth, and higher insurance premiums. It is probable that increased premiums, taxes, and the debt burden caused by this bill will force a choice between a free market system and a single-payer government run plan later in the decade.
As investors we have to analyze the current environment and try to take advantage of opportunities and avoid as much risk as possible. Here are two stocks that will benefit from the health care bill and the current economic environment. Both Wal Mart (WMT) and CVS Caremark (CVS) are companies that will benefit from increased prescriptions for the 30 million new people covered and to seniors who will have more of their prescriptions costs paid for. I have not purchased these stocks for the Arbor Asset Allocation Model Portfolio (AAAMP) because I believe they are a little over priced right now. I hope to add these great companies to the portfolio at lower prices.
Disclosure: The Arbor Asset Allocation Model Portfolio (AAAMP) has no position in WMT or CVS.
| AAAMP Blog by Ken Faulkenberry | |
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Ken Faulkenberry earned an MBA from the University of Southern California (USC) Marshall School of Business with an emphasis in investments. Ken has 25 years of investment experience and is dedicated to helping people with self-directed investment management through the Arbor Investment Planner. His asset allocation strategies have an outstanding performance record. |
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