How has the US election cycle affected healthcare stocks?

How has the US election cycle affected healthcare stocks?

Orbis Investments

When faced with extreme uncertainty, human nature often prompts investors to dramatically shorten their investment time horizons and overemphasise worst-case scenarios.

We have seen this on numerous occasions throughout our history, but a particularly good example came in 2008, when then-incoming US President Barack Obama made healthcare reform a top priority.

The combination of fears about “Obamacare” coupled with the global financial crisis created the perfect storm for the healthcare industry.

At the time, the market was pricing in catastrophic outcomes for managed care organisations (MCOs) such as Anthem, which provide both health insurance as well as a broader range of related services. The doomsday view was that Anthem and its peers would be put out of business by a nationalised healthcare model.

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