What Does Trumpcare Mean For Healthcare Stocks?

 

 

 

January 24, 2017, 4:30pm EST

The S&P 500 traded up to new record highs today.  This morning the new President had three more big American business leaders (the car makers) in the White House for a face-to-face.
The three big American car makers all had big stock performance on the day, and their leaders walked away with very positive remarks (not dismay). It turns out that logical business operators like the prospects of doing business with the tailwinds of pro-growth economic policies.

Now, with Obamacare on the chopping block for the new administration, today let’s take a look what healthcare stocks might do.

Healthcare stocks in general have been beaten up since July of 2015, when a Republican Congress brought a vote to repeal Obamacare.  The S&P 500 is up 7% from that date.  The XLF (the ETF that tracks healthcare stocks) is down 9% in the same period.

Before that, Obamacare had been a money printing machine for much of the healthcare industry.

In this chart below, of the health insurance provider, Aetna, you can see the impact of Obamacare on the stock.

And here’s a look at the hospital company, HCA, also a big winner under Obamacare.

So what happens under Trump care?  Trump has said he wants to keep people insured.  It sounds like a rework to a more competitive system, rather than a tear down and rebuild.  The first sign of visibility on a new plan is probably the greenlight to buy the healthcare ETF, and maybe the under performers in the Obamacare era.

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