Be It Bush or Gore, Wall Street Can Still Win

Though the
presidential recount is still ongoing in Florida, the final outcome of the race between Texas Gov. George W. Bush (R) and Vice President Al Gore will likely "make a significant difference" in investors' financial strategies, investing columnist Andrew Leckey reports in a Richmond Times-Dispatch column. He notes that those investing in pharmaceutical and tobacco stocks would probably benefit under a Bush presidency, while Gore's "'no debt' mentality" would boost bonds. Quoting Bear, Sterns economist John Ryding, Leckey adds, "Gore winning makes people think more of regulation in the economy and larger health care and Medicare spending." Leckey also reports that Ann Arbor-based fund-tracking firm MAXfunds.com created a fictional "George W. Bush Fund" and "Al Gore Fund," based on companies that contributed soft money to their campaigns. Among the Bush stocks, Leckey cites several health-related firms, such as Bristol-Myers Squibb, British American Tobacco, Cigna, Philip Morris and Pfizer, while Gore's fund includes Rite Aid. In addition, Leckey argues that Bush's prescription drug benefit plan would offer incentives to private sector providers, including Merck, Pfizer and the SmithKline Beecham Group, while Gore's plan would not. Still, Leckey warns investors not to make "dramatic changes" if they are "generally happy" with their current holdings, quoting Prudential Securities Washington policy analyst Charles Gabriel, "Don't overreact to the election results, for it is easy to exaggerate the various elements of conventional wisdom that have been predicted" (Leckey, Richmond Times-Dispatch, 11/12).

According to New York Post writer Emily Lambert, the election results proved "just what the doctor ordered" for health care stocks, with industry insiders "already cheering." She notes that the Republican Congress, which tends to side with the industry on issues such as patients' rights, will keep the industry "healthy -- and wealthy" regardless of who wins the White House. Also quoting Gabriel, she concludes, "This election could not be more friendly to the health care industry."

The Post also offered consumers advice from experts on where to invest their money in the health care industry, in light of the election results. Among biotechnology firms, CIBC World Market analyst Matthew Geller recommended Amgen Inc., Protein Design Labs Inc. and ImClone Systems. He said that while "Bush would be welcomed [by the industry] with open arms," even if he fails to win the election, "his spirit will." Geller added, "We think that biotech is right now the hottest area of growth stock. The genomics revolution is taking place right now ... Politics can't stop the revolution in drug development taking place." Among pharmaceutical companies, Standard & Poor analyst Herman Saftlas recommended "branded bellwethers" Bristol-Myers Squibb, Pfizer, Eli Lilly & Co. and Johnson & Johnson, as well as generic firms Forest Labs, Watson Pharmaceuticals and King Pharmaceuticals. Noting that drug firms successfully campaigned for Republicans in Congress, he said, "Since this Congressional composition right now has only a slight edge to the Republicans, it's not likely that any drastic Democratic plan would get off the ground." Although Saftlas admitted that the "dreaded eventuality" of a prescription drug plan has not disappeared, he concluded that the "threat of massive reform is gone." In the managed care industry, SG Cowen analyst Edmund Kroll recommended Cigna Corp. and UnitedHealth Group Inc. as "stocks to watch." Citing a recent decline in HMO stocks over concerns about a "yet-to-be written" patients' bill of rights, he said, "This election is over and done with, still these stocks trade at a discount. They have high growth rates; their earnings have been very strong." Among hospital management firms, UBS Warburg's Matthew Ripperger recommended Tenet Healthcare Corp. and Universal Health Services, although he noted that the industry remains a "safe haven" among health care firms. "There's bipartisan support for hospitals in terms of giving money back to providers," Ripperger said (Lambert, New York Post, 11/13).