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Obamacare Causing Insurance Stocks to Plummet

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posted on Jul, 3 2012 @ 04:31 PM
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Now, this is somewhat surprising to me.....Health Insurance stocks across the board are dropping like rocks. I had thought that, since the Obamacare law was written by the health insurance industry lobbyists, that they would be enjoying a stock boom due to all the supposedly new clients that will be forced to buy their product.

Yet, the opposite is occurring. Note the following stocks and their devaluation over the past few days:

Wellpoint, Inc (parent company of Blue Cross / Shield): Five days ago, $70.31. Today, $60.87.

Aetna: Five days ago, $41.55. Today, $38.15.

Cigna: Five days ago, $46.34. Today, $42.74.

Humana: Four days ago, $81.23. Today, $77.03.

Coventry: Five days ago, $33.79. Today, $31.08.

United Health Care: Five days ago, $60.60. Today, $55.00.

All stock prices courtesy of the Wall Street Journal: online.wsj.com...

I can't help but think that most people are unable to purchase these plans, and are just planning on paying the tax in the next few years.

I am surprised by this outcome, but when I think about it, it appears that Obamacare was the perfect way to tank these industries. Maybe they will recover, but an across-the-board tanking like this indicates a trend that investors are picking up on, and they are dumping these stocks from their portfolios.

Note this from Wikipedia concerning Wellpoint, Inc: en.wikipedia.org...

WellPoint's corporate "political action committee" (PAC), called "WellPAC," raised $1.3 million in 2010, and contributed nearly all of it to Federal and non-Federal candidates. Of the monies given to Federal candidates, 75 percent was given to Republicans, whose party opposes the health care reform enacted, and 25 percent was given to Democratic candidates. [4] WellPoint Inc. spent an additional $1 million on lobbying activities in 2010, and 77 percent of that amount was given to Republicans, and 22 percent was given to Democrats.[5]


Whoops! They didn't butter both sides of their bread evenly enough, it seems.




posted on Jul, 3 2012 @ 04:47 PM
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Well that's not why it is plummeting. Stock analysts are predicting that all to most Americans will not pay for the insurance and just pay the small $95 tax penalty. Then these same people will use the insurance when needed as they can't be denied coverage. So this will kill the profits of the health insurance carriers.

SO this leads to people only using insurance for expensive needs and then dropping it when they are done. So the insurance companies won't have long term clients, only pay as you go clients and the costs will surge. So wallstreet is saying the insurance companies won't survive with this model.

See how its not going to work?



posted on Jul, 3 2012 @ 04:56 PM
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reply to post by TWISTEDWORDS
 


I did mention that most people would not purchase the insurance, but it didn't quite dawn on me that people would pick it up for expensive procedures and illnesses, and then drop it later. Good point, thanks for your input.

And no, it won't work....which begs the question, why did the health insurance companies help write a law that would kill their industry?



posted on Jul, 3 2012 @ 04:59 PM
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I have no intention of buying the required insurance, neither will I pay the penalty/tax.



posted on Jul, 3 2012 @ 05:00 PM
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those 1-2-3-5% drops in price are called volatity... its not the end-of-the-world for those omnibus heathcare providers

now there is hedging that Pomney might win in Nov and the Obama-care mandate will be stripped down

but thats not what is really unfolding right now... it is a function of the market speculators (and the high-frequency-trade algorithims)...that you seem to be inclined to posit as 'truth' and ' reality' in the NYSE

little daily 'snapshots' do not-a-trend-make

i appreciate your vision...in seeing the anomaly... but i personally think that your prognosis is incoorrect


just as i still see Gold trading a $1440,oo rather than the $1750.oo that many expect in the near term


(if i'm wrong then i lose a bunch of $)



posted on Jul, 3 2012 @ 05:01 PM
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Just part of the market game. Get money now, re buy cheaper because it will go up again. Hype is what drives the money making for the big players.



posted on Jul, 3 2012 @ 05:07 PM
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reply to post by DarthMuerte
 


You and me both. I'm not going to buy it, and not going to pay "penalty" either.



posted on Jul, 3 2012 @ 05:10 PM
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reply to post by St Udio
 


Hmmm...I'm not saying that the stocks will be down forever, because that is not how the stock market works. I have watched the markets for over three years now, every day, because my husband day trades.

Gold is being artificially suppressed, but that is my opinion only.

I posit nothing as solid facts, but I was surprised by this reaction to the Supreme Court decision, and thought I would share it. Thanks for your thoughts on this.



posted on Jul, 3 2012 @ 05:11 PM
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reply to post by roadgravel
 


Of course. Buy low, sell high is the mantra that every trader lives by. However, some of these stocks have broken below their "resistance lines" in terms of prices, and they could go lower. The traders who saw this and shorted those stocks are happy campers indeed.



posted on Jul, 3 2012 @ 05:13 PM
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Folks, I'll put the question out there again:

If Obamacare is bad news for the insurance companies, why would they write legislation to hurt their own industry? Are they anticipating a short-term hit to their stock prices, but a long term gain? Anybody able to prognosticate the future of these stocks?

Anybody?



posted on Jul, 3 2012 @ 05:21 PM
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Originally posted by TWISTEDWORDS
Stock analysts are predicting that all to most Americans will not pay for the insurance and just pay the small $95 tax penalty.


Actually it starts in 2014 at $95 or 1% of gross income (whichever is greater), and maxes out in 2016 at $695 or 2.5 percent of income.



posted on Jul, 3 2012 @ 05:24 PM
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Insurance is only going to keep making more and more money. They already control the health system. A person gets what the insurance says they can have. Medical pricing is so high that almost everyone must abide by what they say will get paid.



posted on Jul, 3 2012 @ 05:24 PM
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I think the game isn't over yet. The insurance companies are looking at a bigger picture and I believe hedging on the outcome of the next election. That they seem pretty confident of the outcome makes me wonder if they haven't already purchased the politicians they need to get the outcome they desire. I can't wait to see how it all plays out too bad their are real people involved that will end up broke or dead when it's all said and done.



posted on Jul, 3 2012 @ 05:30 PM
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reply to post by Ladysophiaofsandoz
 


Good point. It is a dreadful waiting game, isn't it? You're right, an initial hit on a stock price, in order to achieve a greater gain, makes sense. What is it that they know? Which candidate is their buddy in the future?

As a rule, we don't trade banks or health insurance stocks, since we hate promoting criminals, so I was hoping that people would help me to see what is going on with this. Ask me about gold, silver, oil, cotton, or natural gas, and I am much more in the know with those commodities....but companies like health insurance, we don't trade them, don't watch them, and don't know their regular behavior. Thanks for your insight!



posted on Jul, 3 2012 @ 05:33 PM
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Originally posted by FissionSurplus
reply to post by DarthMuerte
 


You and me both. I'm not going to buy it, and not going to pay "penalty" either.


I won't buy it, or pay the *tax*.

Even though I was born and raised here, and many generations of my French German heritage before me....I'm going to pay for a fake green card...then I'll be set for life....


Des




edit on 3-7-2012 by Destinyone because: (no reason given)



posted on Jul, 3 2012 @ 05:39 PM
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Originally posted by FissionSurplus
Now, this is somewhat surprising to me.....Health Insurance stocks across the board are dropping like rocks. I had thought that, since the Obamacare law was written by the health insurance industry lobbyists, that they would be enjoying a stock boom due to all the supposedly new clients that will be forced to buy their product.

Yet, the opposite is occurring. Note the following stocks and their devaluation over the past few days:

Wellpoint, Inc (parent company of Blue Cross / Shield): Five days ago, $70.31. Today, $60.87.

Aetna: Five days ago, $41.55. Today, $38.15.

Cigna: Five days ago, $46.34. Today, $42.74.

Humana: Four days ago, $81.23. Today, $77.03.

Coventry: Five days ago, $33.79. Today, $31.08.

United Health Care: Five days ago, $60.60. Today, $55.00.

All stock prices courtesy of the Wall Street Journal: online.wsj.com...

I can't help but think that most people are unable to purchase these plans, and are just planning on paying the tax in the next few years.

I am surprised by this outcome, but when I think about it, it appears that Obamacare was the perfect way to tank these industries. Maybe they will recover, but an across-the-board tanking like this indicates a trend that investors are picking up on, and they are dumping these stocks from their portfolios.

Note this from Wikipedia concerning Wellpoint, Inc: en.wikipedia.org...

WellPoint's corporate "political action committee" (PAC), called "WellPAC," raised $1.3 million in 2010, and contributed nearly all of it to Federal and non-Federal candidates. Of the monies given to Federal candidates, 75 percent was given to Republicans, whose party opposes the health care reform enacted, and 25 percent was given to Democratic candidates. [4] WellPoint Inc. spent an additional $1 million on lobbying activities in 2010, and 77 percent of that amount was given to Republicans, and 22 percent was given to Democrats.[5]


Whoops! They didn't butter both sides of their bread evenly enough, it seems.


True...but we should be careful about extrapolating too much information merely from stock prices....it gives the people making investment decisions far too much credit and assumes they understand both the health care bill as well as the anticipated effects on the stock market.

Remember..."the market" also approved Facebook for a $38 IPO, didn't see that mortgage derivatives might be a bad idea, failed to foresee GM's insolvency despite the company producing vastly inferior automobiles compared to their overseas counterparts for over thirty years, and for some odd reason still thinks Microsoft is a viable company moving forward.

In short...the people making these investment decisions aren't necessarily very intelligent. Sure...there were some cost controls and coverage requirements placed upon the insurance companies...but they are also gaining an additional 40 million+ policyholders at gunpoint.

Insurance is going to BOOM once the dust and panic settles. Which is a dirty shame...I always have a hard time deciding if it's oil or insurance companies which are the most loathsome creations of the modern world.



posted on Jul, 3 2012 @ 05:40 PM
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Originally posted by FissionSurplus
reply to post by Ladysophiaofsandoz
 


Good point. It is a dreadful waiting game, isn't it? You're right, an initial hit on a stock price, in order to achieve a greater gain, makes sense. What is it that they know? Which candidate is their buddy in the future?

As a rule, we don't trade banks or health insurance stocks, since we hate promoting criminals, so I was hoping that people would help me to see what is going on with this. Ask me about gold, silver, oil, cotton, or natural gas, and I am much more in the know with those commodities....but companies like health insurance, we don't trade them, don't watch them, and don't know their regular behavior. Thanks for your insight!


I applaud the idea of investing in tangible goods...but isn't investing in oil supporting the worst of all the criminal cartels?



posted on Jul, 3 2012 @ 05:45 PM
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reply to post by milominderbinder
 


LOL....Facebook was a classic pump-and-dump perpetuated on the masses. It produces nothing of value, and is only cyberspace. People that were suckered into that one lost their butt.

Often, though, stock prices tend to indicate a trend in the thinking pattern of the investor (whether short term or long term). To me, Obamacare seemed like a can't-lose deal for the insurance companies, but as another poster pointed out, people will refuse to buy the care unless they get really sick, and then get it long enough to pay for the illness, then drop it again.

I still imagine, though, that, in the end, these companies will do better than this initial hit indicates.

I don't assume that the market makers are intelligent, thoughtful, or able to see far into the future (unless they have insider information, common among the investment houses, although illegal). This was simply a bit of a surprise for me, and I thought I'd share it.



posted on Jul, 3 2012 @ 05:49 PM
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Originally posted by FissionSurplus
Folks, I'll put the question out there again:

If Obamacare is bad news for the insurance companies, why would they write legislation to hurt their own industry? Are they anticipating a short-term hit to their stock prices, but a long term gain? Anybody able to prognosticate the future of these stocks?

Anybody?


Yeah...it's just typical market panic. Apple's stock dropped 5% after they released the last iphone (iphone 4S)...presumably because stock analysts were hoping it would also include a laser gun and allow the user to bend the space-time continuum with a free app. However, I can't help but noticed that Apple seems to have recovered just fine.

The people making investment decisions aren't necessarily intelligent...even the one's shuffling around billions in some of the larger funds.

Likewise, we need to remember that EVERYBODY is at least somewhat biased. Bias is a natural part of the human condition. Therefore, any right-leaning individuals who happen to have money invested in the stock market likely had a huge knee-jerk reaction and assumed that the punditry which they so eagerly gobble up on the nightly news and talk radio had merit and thus assumed that the sky is falling.

Insurance stocks are going to go on a three year run until they are so ungodly overinflated that they become the next inevitable bubble to burst.



posted on Jul, 3 2012 @ 05:55 PM
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Originally posted by FissionSurplus
reply to post by milominderbinder
 


LOL....Facebook was a classic pump-and-dump perpetuated on the masses. It produces nothing of value, and is only cyberspace. People that were suckered into that one lost their butt.

Often, though, stock prices tend to indicate a trend in the thinking pattern of the investor (whether short term or long term). To me, Obamacare seemed like a can't-lose deal for the insurance companies, but as another poster pointed out, people will refuse to buy the care unless they get really sick, and then get it long enough to pay for the illness, then drop it again.

I still imagine, though, that, in the end, these companies will do better than this initial hit indicates.

I don't assume that the market makers are intelligent, thoughtful, or able to see far into the future (unless they have insider information, common among the investment houses, although illegal). This was simply a bit of a surprise for me, and I thought I'd share it.



No worries. However...let's say that Americans "just refuse to pay". Does it really matter? The big ruling on the Constitutionality is out of the way. If the proposed taxes/penalties aren't sufficient...I would wager that that other taxes will simply go up instead. One way or another "they" will make certain that the insurance companies are kept nice and fat.

Besides...if both options one AND two fail...why not just get a few trillion from the Fed to cover the balance? That's what we do these days, remember?

Insurance stocks will take a dip for awhile...maybe even until Romney doesn't keep that campaign promise of repealing it on "day one" LOL. Once that minor hurdle is jumped and Obamacare goes into full swing there will then be a MASSIVE bubble that forms after they go on a 3-10 year run of epic proportions.

I'll look you up in 2022 and we can see how close I was on my prognostication. LOL.



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