With the government shutdown in effect, Republicans and Democrats continue digging in on the budget and the battle centers on the controversial Affordable Care Act. As a result, frustrated investors seeing red may be missing a chance to make green. When it comes to investing, emotions and profits are seldom a healthy mix.
"People have a tendency to invest with their own emotions," notes Barry Ritholtz, CIO of Ritholtz Wealth Management and editor of the Big Picture blog. "It's a terrible mistake. Every trader knows it every investor should know it."
Democratic leader Harry Reid says any bill that modifies the controversial health care program will be dead on arrival. The Republicans vow to shutdown the government before they sign off on any hike in the debt ceiling. The numbers for investors are simple: The health care sector is going to win no matter happens to the specific details of Obamacare.
He's been putting money into the Health Care Select SPDR (XLV) ETF and big pharma names like Johnson & Johnson (JNJ) and Pfizer (PFE), as well as "almost any" hospital company. If Obamacare happens, which is still the odds-on bet, "about 45 million Americans with little or no insurance are going to be able to consume medical care," Ritholtz notes. In countries where government health care is the norm (most other industrialized nations) those numbers work to the benefit of the hospital sector companies.
Even if the Republicans stop Obamacare nothing can stop the hands of time. As Baby Boomers head towards the death ceiling they're going to be spending more time and money in hospitals and forestall the inevitable with all the anti-aging potions biotech can create. Again, if it's health care related it's a good call as Ritholtz sees it.
The XLV, the SPDR Biotechnology ETF (XBI) Johnson & Johnson and most other health care related names have been outperforming the market over the last 12 months. They aren't going to fall apart if the Republicans delay Obamacare. Money talks in America. Play the trend with your money and save your passions for the voting booth.
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