Vancouver Investment Advisor Ritch Wigham

Market Perception! Thoughts on U.S health care

I was asked early last week what was on its way, in the stock markets, if the U.S. finally dragged their respective butts into the twentieth century, and advanced a health care strategy?

My answer was effectively nothing would happen. And that by the way is what we saw today (03/22/10).

There is only one reason for this:

1.It was already in the market.

Most of the market people that have been around for any length of time already are aware that any one piece of news ,that takes any length of time to come to a conclusion, has already been dealt with by the market. It is only unanticipated surprises that move markets. There is certainly a short term hesitation (like the first hour this morning) but markets will go to where they were headed anyway.

That is not to say that there are many times when the market cannot possibly anticipate the outcome of what it knows is coming. For example, I can think of nothing more frustrating than trying to anticipate the release of most government statistics. Whether GDP or something that should be as simple as a crop report, government release can give markets fits trying to get an advantage before the report in question is actually released. We have been through one of the most volatile periods for reports in the last two years that I can remember. To say these were uncertain times would be an understatement, but the markets seem to have recovered in a steady manner despite slowly improving numbers.

In broad terms, individual reports have a minor effect but can have a major impact when taken collectively. This is arguably why sometimes bad numbers have no effect or good numbers are ignored in the context of the broader market. “If the market didn’t want to go higher it wouldn’t.” “Why didn’t the market go up on the good news?” “That should have been a disaster, why didn’t the market crash?”

These are all questions that people ask when they think they guessed right but still didn’t make any money. They get very frustrated (understandably so) when it seems not to make sense. This is not always the case, but it is usually in the market already. This weekends decision on health care is a perfect example. If you really think about it, individual stocks may be affected but why should the overall market take a hit. The reality is there are probably many opportunities to make some of the nearly trillion dollars of newly printed government money being distributed as there are ideological reasons to dislike this government initiative. So why wouldn’t the market prefer to look at the money and not the esoteric reasons for a negative reaction?

To finish,” Anything that takes a length of time to realize, and is not of a spontaneous nature, has already been dealt with by the capital marketplace.”

In my case, I learned this when it took Bush 1, literally months to finally invade Iraq!

Talk to you soon,

Ritch
Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-RCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (“RCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor RCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.