John Wasik

Beyond the Glitches: Profiting from Obamacare

Oct 28, 2013 17:16 UTC

CHICAGO, Oct 28 (Reuters) – In the shadow of the bungled
rollout of the U.S. Affordable Care Act health insurance
exchanges, a handful of companies are quietly profiting from the
biggest expansion of healthcare since Medicare in the mid-1960s.

Companies that were supposed to be collateral damage from
the new wave of ACA regulations have become Wall Street
darlings. Those that specialize in health records technology,
insurance and pharmaceuticals will benefit from the need for
more drugs, medical services and policies through the state and
federal exchanges.

In its first weeks, the ACA healthcare exchange websites
were swamped with more than half a million Americans applying
for insurance, with more than 19 million visiting the federal
site alone. Despite numerous technical roadblocks, those strong
traffic numbers bode well for companies that benefit from
selling new policies along with the Medicaid expansion that is
part of the new health law.

“ACA is here to stay,” says Alex Gurvich, a portfolio
manager for the Rockledge Group in New York. “It will go through
some changes, but the fundamental valuations support
outperformance in the healthcare sector. A lot of companies did
poorly coming up to the ACA rollout, but it turned to be the
other way around.”

The most obvious beneficiaries have been mega-insurers such
as UnitedHealth Group Inc, whose shares at Friday’s
close were up more than 22 percent over the past year. That is
nearly 5 percentage points better than the Standard & Poor’s 500

Three portfolio strategies to hedge political risk

Oct 21, 2013 17:50 UTC

CHICAGO (Reuters) – For angst-addled market watchers, the U.S. debt ceiling and budget chaos has been like one of those amusement-park rides in which you ride upside down. It’s harrowing and probably not over yet.

In addition to market and credit risk in the stock and bond markets, you need to be acutely aware of political risk. That means finding pockets of profit that are not dependent upon Washington.

Here are three strategies:

1. Balance risk in one fund

If you’re a fairly moderate to conservative investor, having a balanced fund as a core holding could replace several funds that hold just stocks or bonds. While you’re not entirely insulated from political risk, it’s more of a hedge than being completely exposed to stocks or bonds. But can you get one mutual fund to do this for you in a tactical way?

How to navigate the troubled municipal bond market

Oct 15, 2013 19:45 UTC

CHICAGO (Reuters) – If you can avert your eyes from the federal government’s budget and debt-ceiling crisis, you may spot more trouble ahead in the state and local municipal bond markets.

Detroit’s bankruptcy, Puerto Rico’s fiscal woes and unfunded pension liabilities in other states and cities are giving the nearly $4 trillion muni bond market the jitters. Investors have been yanking money out of muni bond funds for more than seven months – triggering redemptions of almost $50 billion since March, according to Morningstar.

That beats the nearly $45 billion in outflows from November 2010 to August 2011, when some soothsayers were predicting massive defaults based on weakening state and local finances and pension liabilities. And the exodus is far from over as the muni bond market heads for one of its worst years in the past half decade.

Circuit breakers investors can use for a debt default

Oct 7, 2013 18:23 UTC

CHICAGO (Reuters) – In times of calamity, every portfolio needs a set of circuit breakers.

And, as Congress speeds toward the debt-ceiling barrier, it is a good idea to consider some inverse exchange-traded funds(ETFs) that move in the opposite direction of stock and bond indexes.

The first major hurdle is October 17, when the Treasury will need authority to sell more debt securities – or face default on its obligations. What if markets get spooked over Washington’s inability to reach a consensus on fiscal matters? If traders truly believe that Congress won’t issue more debt to pay bills it has already racked up, that will send interest rates on Treasury paper soaring.