During the last 20 years I have been involved in health insurance, there have been many changes – some have proven to be good, but others have not. Let’s start by clearing up some misunderstandings: There is no health care crisis in this country! Let me defend this heretical position.
While the Health Care Reform debate rages and Congress inches closer to passing something, now would be a good time to review other areas in which our government has strongly encroached or outright took over. These experiences should tell us something about how likely things will turn out well in the long run.
Yesterday President Obama announced the (forced) resignation of GM’s long-tenured CEO and Chairman, Rick Wagoner along, with a demand that the company take stronger action in restructuring in the next 60 days or face bankruptcy. At the same time he guaranteed both GM and Chrysler’s warranty programs and provided interim funding to keep both companies going, albeit on different paths as he announced the arranged marriage for Chrysler with Fiat in the next 30 days. This is huge news in economics, investments, politics, and nearly any other arena. Rush Limbaugh weighed in with the retail store policy, “if you break it you bought it.” President Obama just took away GM’s leadership and then said “you have to do better, and quickly.” If the President is promising sweeping changes in taxes, regulation, and health care to go along with taking control of businesses that are too large to fail, how does anyone plan for and invest in the future without knowing what the ground rules are going to be? The markets reacted strongly to yesterday’s announcements, broadly losing over 3%.
Although there are different policies for homeowners and tenants (renters) and even condominium owners, in the U.S. there are standardized basic forms that insurance companies must use for most homeowner’s insurance (with the exception of Texas, which still makes state unique forms available, too.) This makes comparing coverage offers from different insurance companies somewhat easier if you know which coverage forms they are quoting and what limits/deductibles they include. You also need to know if they have any special endorsements restricting or broadening coverage. For homeowners, policies that include your home and personal property come in three flavors – basic, broad, and special. All three are “package” policies including property coverage and liability coverage. The big difference is in the property coverage.
Turmoil in the market has impacted nearly everyone. It is hard to know just what to do. Investing these days reminds me of the saying – “Predicting is hard, especially about the future.” The economic news is not good, and may not improve for a while. So, what to do? Investment choices are guided by several factors. There is no answer that applies to everybody, even during better economic times. Three factors will dominate your approach to investing: investment horizon, risk tolerance, and your involvement. Let’s look at each one.
