The Return of Risk-Reward Ratio Rational
The US recession has sure taken a lot of investors out of the market, as those who are risk adverse and have not seen any viable future rewards have shied away. Part of the problem has been the interference of government in free markets, and the perceived march towards socialism, it quite frankly scares investors and businesses.
Meaning businesses do not invest or risk further capital and move to hedge against further economic decline; they cut costs, lowering earnings projections and as we’ve seen have massive layoffs. Investors by the same token are not willing to invest with the prospect of that much risk, without the potential of reward and growth in the stocks of those corporations.
Now things seem to be changing, as it looks like President Obama’s ObamaCare plans do not have the support they need to pass, meaning socialized medicine seems less likely. Recently, in a speech President Obama backtracked on his goals for a quick passage of his Health Care government run insurance program, and now is setting a goal “by the end of the year we need to get this passed.” Two reasons, one there is not enough support for the bill, and two, because congress takes a big break over the summer months.
In the past all the attempts at socialized medicine and the various bills involved in moving that direction, have either been passed quickly, or strung out and eventually failed. We are looking more like the latter now, this time and that is a sign of relief for Wall Street and investors, also privately run health insurance companies. Thus, socialism is stalling out and “The Return of Risk/Reward Ratio Rational” is making more sense these days.
Source:ezinearticles.com
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