If the turmoil in Washington, D.C. is getting you down and making you want to stop reading headlines or watching TV news, I have a non-partisan, ideology free alternative for you. Watch the stock market instead.
The stock market doesn’t care whether you’re from a red state or a blue state, political veteran or complete novice. Stock investing is a meritocracy that distributes its rewards and punishments with total disregard for how you voted or your state of satisfaction with what’s happening in our nation’s capitol.
So, for example, on Wednesday, we got a decision from the U.S. Federal Reserve Board about interest rates and that decision was of great interest to the market. Of course the market had decided weeks ago what the odds of an interest rate increase were, and that calculation was priced into stock prices for a long time before the announcement.
The market is political only insofar as political decisions have economic consequences. The so-called Trump Bump that lifted the market following last November’s election was a calculation of what a loosening of Federal regulation and increased infrastructure spending would have on the economy, with zero regard for purely political consequences.
It’s not that the stock investing world doesn’t have ideological conflicts. Get a group of growth investors talking with a bunch of value investors and you can get a pretty good shouting match going. Not to get personal, but growth investors tend to regard value investors as stick-in-the-mud slow-pokes while value investors think growth investors are irresponsible risk addicts. It can make for a fun argument.
(Quick note: The Cabot Wealth Summit will be held in Salem, Massachusetts on September 13 through 15, and it’s the best place I know for growth investors, value investors and the rest of the entire stock investment spectrum to get hands-on, personal guidance on how to become better at what they do. Cabot’s analysts—including me talking about emerging market stocks—will sharpen your skills and answer your questions. We will have our options trading expert, a small-cap wizard, a dividend guru and specialists on bargain growth and wide spectrum investing. It’s intense and hugely enjoyable and a chance to talk to your favorite Cabot analysts and rub shoulders with other dedicated stock investors. I hope to see you there.)
Back to the difference between politics and the stock market, here’s a chart of WellCare Health Plans (WCG), a Florida-based company that provides managed care services through Medicaid and Medicare to almost four million members. About 65% of the company business comes from Medicaid programs, and it has been a slow-but-steady grower for years. One look at the weekly chart for WCG will tell you that the stock caught fire in February 2016 after a period of stagnation that lasted more than a year. There’s a second burst of high-volume buying right after the November election, then a consolidation in the first three months of 2017. Buying heated up again in April and early May, and the stock is now drifting higher again, waiting for its next catalyst.
If you want to get away from the political divisiveness and uncertainty about health-care policy, I think WellCare Health Plans is a perfect way to do it. Since it appeared in Cabot Top Ten Trader in January 2017, WCG is up from 137 to 174. And that’s a nice bit of good news you can enjoy following.