The Market Marches On | Investor Beat - 10/1/13 | The Motley Fool | Summary and Q&A

TL;DR

Despite the government shutdown, the market is bouncing back as investors remain optimistic about long-term investments.

Key Insights

• ❓ The Affordable Care Act has significant effects on the healthcare sector and investor strategies.
• 🉐 Companies in the healthcare industry with durable competitive advantages and expansion of coverage are likely to benefit.
• 😀 Walker and Dunlop faced a decline in loan origination due to industry-wide limitations.
• 💇 Merc's job cuts reflect a broader trend in the pharmaceutical industry towards marketing and distribution.
• 🔉 Zillow, despite being classified as a media company, may still be affected by a housing market downturn.
• 🛀 JC Penney's stock price is showing some value to investors despite ongoing struggles.
• 😋 Panera, a high-priced retail food company, has drawn investor interest due to potential growth.

Transcript

the government shuts down and the market goes up because the market investor beat starts now thanks for watching I'm Alison Southwick after taking a hit yesterday on the threat of a government shutdown the market is clawing its way back up today as day one of the shutdown actually begins joining me now in studio is David Hansen and Mike Olen our to... Read More

Questions & Answers

Q: How is the Affordable Care Act impacting healthcare investments?

The ACA is seen as a significant act that will affect how healthcare is transacted. While some investors believe it will curb cost inflation, others are skeptical. However, the long-term potential of certain healthcare companies remains intact.

Q: What companies are expected to benefit from the expansion of coverage under the ACA?

WellPoint and United Health, as the largest Managed Care organizations, are well-positioned to provide excellent service and increase their insured roles. Another company, Express Scripts, is also likely to benefit from demographic trends and increased consumption of pharmaceuticals.

Q: Why did Walker and Dunlop experience a decline in loan origination?

Walker and Dunlop's loan origination declined due to Fanny May and Freddy Mack reaching their cap on the number of loans they can take. This problem is not exclusive to the company and reflects industry-wide limitations. However, the stock is relatively cheap, and some investors see it as a potential buying opportunity.

Q: Why did the market react positively to Merc cutting 8,500 jobs?

Merc's decision to cut R&D staff is seen as a strategy to focus on higher return endeavors and streamline the company. Pharmaceutical companies have been shifting their focus from drug development to marketing and distribution, which investors believe will benefit the company in the long run.

Summary & Key Takeaways

• The Affordable Care Act, also known as Obamacare, is launching the online insurance marketplace, causing some Capitol Hill drama.

• Investors believe that the ACA will only accelerate the trend of curbing healthcare cost inflation in the long term.

• Companies in the healthcare sector, such as WellPoint and United Health, are expected to benefit from increased coverage under the ACA.