How to Trade the Obamacare Ruling

During a visit today (Wednesday) to Fox Business' "Varney & Co." program, Money Morning's Keith Fitz-Gerald tackled the issues surrounding the Obamacare ruling and how investors can trade the news.

Since the U.S. Supreme Court is scheduled to announce its Obamacare ruling tomorrow, we wanted to share with you this Q&A session with Keith on what you need to know about the decision.

Keith also shared what he thinks of Facebook stock as the market is flooded with analyst opinions from the underwriting firms.

You can see all of Keith's analysis in the video below.

Q, from "Varney & Co." host Stuart Varney: The Obamacare ruling is imminent. Will insurance companies tank if it's repealed, and how would you trade that?

A, Keith Fitz-Gerald: I can see this going two ways...

1)If it's upheld, insurance companies will make bank, but businesses offering services to small and mid-cap companies that are likely to be hamstrung are going to do better. That includes Paychex Inc. (Nasdaq: PAYX) or Express Scripts (Nasdaq: ESRX), for instance. Both will help small companies spend their healthcare dollars more efficiently.

Loading the player ...

2)If struck down, big insurance companies will have to retool and restructure as they are the ones that hold the biggest stake in this debate. It's a little late to make that bet today, but when the ruling is announced we'll have some clarity and can make a decision then.

Q: But then we'll head into re-elections and the mess will start all over again without clarity. Should you buy stocks anyway? Is that the answer; do you always buy stocks?

A: Right now, I don't like what I see so we're raising cash; but that doesn't mean I'm getting out of the game.

I am always on the hunt for the best companies, particularly when market events beat them down. There's always a lack of clarity: Europe, China, debt, Greece, Stockton (California which announced bankruptcy today), Obamacare...take your pick. That's the way markets work.

At some point, you have to make an intelligent decision and invest anyway. History shows that's a very profitable thing to do.

Q: Before I let you go, what about Facebook? Would you own it? (The quiet period ended today so analysts at banks involved in the IPO can comment)

A: Absolutely not. I think the stock is worth $ best. They have 900 million users who may produce $1-something a year in revenue, there's no real basis to monetize it, they can't control the mobile space...I think hoodies are us.

Q: So you wouldn't touch Facebook with a 10-foot pole?

A: Not even a 20-foot pole, and you can "like" that comment.

Related Articles and News: