Patient Protection and Affordable Care Act by Curtis Lyman

March 7, 2013 § Leave a comment

With the Supreme Court’s upholding of the Obama administration’s signature legislation, the Patient Protection and Affordable Care Act, only recently secured, their effect on healthcare stocks remains an open question. Curtis Lyman, financial advisor, investment strategist, and head of the Lyman group, a partner of Hightower Advisors, asserted in a recent blog post that the healthcare industry may be a better bet than utilities (http://hightoweradvisors.com/who-we-are/hightower-advisors/curtis-lyman/blog/). The utilities industry has traditionally been a safe sector for investors, but new technologies and the threat of forthcoming regulations lead financial strategists to question the position of such stocks in their portfolios.

Two articles from The Wall Street Journal asserted that no matter how the decision on the legislation, popularly known as Obamacare, came down, investment in healthcare would remain strong (blogs.wsj.com/marketbeat/2012/06/27/healthcare-investors-arent-sweating-supreme-court-ruling and http://blogs.wsj.com/privateequity/2012/06/27/supreme-court-decision-won%E2%80%99t-dent-investment-in-health-care-sector/). The recent response to the ruling showed boosts to the industry in a number of different avenues.

The day after the ruling saw a rise in investment in hospitals and Medicaid providers, but a drop in the health insurance sector (http://articles.latimes.com/2012/jun/29/business/la-fi-health-stocks-20120629). Investors are weighing the benefits of the law, in full effect in 2013, for healthcare providers who should see more secure revenues due to the specific upholding of the individual mandate. Concern persists, however, regarding the potential downside for insurers whose profit margins might take a hit with the likely increase in the number of individuals who in previous years would have been denied coverage.

At the beginning of July, trading in health insurance related ETFs surged and the healthcare bond market was up. (http://blogs.barrons.com/incomeinvesting/2012/07/10/supreme-court-ruling-gives-a-boost-to-healthcare-bonds/ and http://www.etftrends.com/2012/07/healthcare-etfs-breaking-out-after-supreme-court-ruling/).

The Lyman Group is a team of investment professionals registered with HighTower Securities, LLC, member FINRA, MSRB and SIPC & HighTower Advisors, LLC a registered investment advisor with the SEC. All securities are offered through HighTower Securities, LLC and advisory services are offered through HighTower Advisors, LLC. This is not an offer to buy or sell securities. No investment process is free of risk and there is no guarantee that the investment process described herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. Before investing, consider the investment objectives, risk, charges and expenses. Diversification does not ensure against loss. Investors may lose all of their investments. The securities mentioned herein may not be suitable for all investors. These materials are solely informational. In preparing these materials, we have relied upon and assumed without independent verification, the accuracy and completeness of all information available from public and internal sources. HighTower shall not in any way be liable for claims and make no expressed or implied representations or warranties as to their accuracy or completeness or for statements or errors contained in or omissions from them.

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