Investment Advice

by Don Boudreaux on March 27, 2010

in Health, Hubris and humility, Man of System, Politics, Prices

Here’s a letter sent today to the Wall Street Journal:

Rep. Henry Waxman is angry that corporations are now writing down the losses they anticipate they’ll incur as a result of Obamacare.  So he’s demanding that many of these firms’ executives testify before Congress to explain this practice that he says “appears to conflict with independent analyses, which show that the new law will expand coverage and bring down costs” (“The ObamaCare Writedowns,” March 27).

Overlook Mr. Waxman’s arrogant heavy-handedness and ask: if Mr. Waxman is correct, why aren’t he and those who trust his judgment now buying shares of these companies?  By making these companies appear to be less valuable than Mr. Waxman believes them really to be, the writedowns will lower these companies’ share prices.  If Mr. Waxman buys now, when Obamacare’s promised cost-reductions materialize these writedowns will prove to have been mistaken, the companies’ share prices will rise, and Mr. Waxman – having put his money where his brilliant mouth is – will be rich.

Sincerely,
Donald J. Boudreaux

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