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Investing around Obama's Speech on Healthcare

09/10/2009

Call me cynical, but the math for healthcare reform just doesn't add up. The plan covers more people, reduces the current cost for existing policy holders, and will not increase the deficit - sounds rather magical.

Yesterday, however, the market didn't seem too concerned about the impending speech; let's see what happens in the next few days. If my analysis is correct, the market is anticipating a "Healthcare Lite" bill to pass.

If there was anything that struck me about last night's speech, it was President Obama's claim that he will be the last President to take up the healthcare issue. With that "legacy" theme, I expect something will get passed, but a lesser version of what is being bandied about now. A lesser version is the best possible scenario for the markets. Let's say the plan costs half the expected $900 billion current price tag and covers less than half the 46 million Americans who are currently uninsured. What is "market positive" is that the healthcare sector holdings are currently a heavy "underweight," expecting a much grander bill. From managed care to pharma to biotech, a "lesser version" will add another leg of foundation to the recovering market.

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