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Don’t Buy and Sell Stocks Based on TrumpCare

Last Friday’s TrumpCare vote will have ramifications for the American public, but you shouldn’t buy and sell stocks based on the outcome.

As I write this on a Friday afternoon, House Republicans are in the process of trying to pass their health care bill, a replacement to ObamaCare that has been dubbed TrumpCare. By the time you read this, you may know how the vote went. But regardless of how it went, you shouldn’t buy and sell stocks based on a whether or not a health care bill passes.

When big events like these happen, financial news outlets tend to overstate just how much the outcome will impact your stocks. It’s no mystery as to why: strong opinions one way or another, however outlandish or unrealistic, are good for clicks in today’s 24-hour, internet-driven news cycle. Sure enough, I saw one headline suggesting that if TrumpCare fails to pass, it would send certain Trump-favored sectors (financial stocks, energy stocks, infrastructure stocks) spiraling downward because it would be a sign that Trump might not have the political muscle to get some of the other “America First” bills from his agenda to pass.

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That’s total bunk, in my opinion. People aren’t likely to sell stocks that are performing well in sectors totally unrelated to healthcare simply because of a House vote. They’re even less likely to buy stocks in those sectors based on anything related to healthcare. While today’s TrumpCare vote is sure to affect certain healthcare stocks, that’s the only sector that a new bill would impact in a meaningful way.

When you buy and sell stocks, you do so for much simpler reasons: the stock’s chart looks good or has taken a turn for the worse; sales and earnings are trending in the right or wrong direction; you like the company and its products or no longer have faith in either. You don’t do it based on the result of a vote—unless it’s the presidential election or perhaps a big swing from one party to another in the midterms.

Thus, don’t expect any big swings in the market based on TrumpCare. I wouldn’t try to derive any more big-picture investment meaning from today’s vote other than how it might impact the healthcare sector going forward (for example, a “yes” vote would be good for health insurance stocks, as I wrote earlier this month). Unless your portfolio is heavily weighted in the healthcare sector, you shouldn’t buy and sell stocks based on what happens to the TrumpCare bill.

The financial headlines in the coming days may tell you otherwise—anything to grab your attention or sell newspapers. Just try not to let them convince you to buy and sell stocks you weren’t already thinking of buying and selling.


Chris Preston is Cabot Wealth Network’s Vice President of Content and Chief Analyst of Cabot Stock of the Week and Cabot Value Investor .