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For Investors Only
I have opined almost from the beginning that ObamaCare was/is a godsend for investors and for corporations. I was reminded of that again while reading Sylvia Nasar's Grand Pursuit: The Story of Economic Genius.
It's hard to believe (with hindsight being 20/20) that Keynes wrote in the early 1920's, during the interwar years: "... inflations and deflations made it difficult for investors and businessmen to calculate the effects of decisions and, to a much greater degree than the public appreciated, distorted decisions to save or invest." -- p. 284.
Before ObamaCare there were two huge problems for businesses of all sizes vis a vis health care: inflationary costs and unpredictability. Unpredictability is the bigger of the two problems. With ObamaCare, both of those problems have been solved. Corporations can now plan precisely what their health care costs will be going forward by cost-shifting their employees over to ObamaCare. Many (most) have already done that: instead of offering a company health care program, CEOs can give their employees a fixed monthly amount to help pay health insurance premiums. CEOs will determine the amount to be paid, not Blue Cross/Blue Shield. That is huge. [By the way, cost-shifting employees to ObamaCare is the patriotic thing to do; ObamaCare is the law of the land.]
But there's something else going on in America that will help investors: the energy revolution.
Long-time readers will remember the posts by analysts suggesting that the "Bakken experiment" has resulted in flattening the volatility of the price of crude oil. I assume folks remember the volatility of crude oil that started with the OPEC embargo back in the 70's and continued through the early years of the Bakken boom -- fifty years of volatility. The price of oil would fall, only to surge with the "outbreak" of any "world crisis." Folks were wringing their hands when oil hit $150/bbl but the actual price was less of a problem than the volatility. Keynes had figured out that "... inflations and deflations made it difficult for investors and businessmen to calculate the effects of decisions and, to a much greater degree than the public appreciated, distorted decisions to save or invest." Likewise, it is now apparent that the volatility of the price of oil was a much bigger problem than the actual price. If the actual price -- whether high or low -- was predictable, businessmen could plan. With volatility, they could not.
It is now apparent that the energy wealth in North America has evened out that volatility. Best example: oil hardly moved during the Crimean crisis. I think the entire range for WTI during this period was between $98 and $101. That is an incredibly narrow range, even in "normal" times, but it is absolutely incredible during a US-Russian "crisis."
All things being equal, ObamaCare and the "Bakken experiment" will be huge for investors going forward. Regardless of what happens politically with ObamaCare, this genie cannot be put back in the bottle -- corporations have been given the green light to cost-shift health care costs to their employees, and they are not going to go back to the way things were.
Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you may have read here.