Oil and Health Care: What They Mean for Investors in 2015

2014 was an up and down year for investors, and the uncertainty in the markets is likely to continue well into the New Year. The US saw stocks on the rise again and a strengthening dollar and low gas prices are making many people excited about the potential rise in consumer spending – and pushing them to expect some gains in stocks for the upcoming year.

According to Reuters, stocks are expected to rise on average throughout 2015. This is good news for investors, especially since quite a few of them took some hits this year. But precisely which stocks are expected to perform, and which ones might remain unpredictable, is a more complicated matter. Let’s look at two very different industries to see how 2015 is shaping up so far.

Oil Stocks

Investing in oil has become a bit trickier than many would like. The majority of the blunders that were made by top investors this year often involved oil, which has fallen to its lowest price in years and is now below $50 a barrel. That’s a pretty significant drop from the $100 it was going for over the summer.

Many people expected to see oil prices continue on the uptick but were taken by surprise by the sudden fall – a fall which is expected to continue, with some investors saying that it may go as low as $40 a barrel. Of course, this will drive some of the small producers out of business, clearing the way for some of the bigger and better-established companies.

Even though there is some speculation that oil may drop that low in 2015, it’s unlikely to stay there.

Investing in oil has always had a steep learning curve, but the capricious nature of the industry has made the investor’s playbook even more complicated. One of the main factors for the drop in oil prices is the United States’ jump in production of oil and natural gas. With the US going from about 30% domestic production to 70%, we suddenly have a huge influx. This plunge is the market attempting to correct its self.

However, given how turbulent the world is at the moment, any small change could start to push prices back up.

Health Care

This was an unprecedented year for health care as well. Although many predictions were made, no one was exactly sure what the effects of the Affordable Care Act would ultimately be. However, it appears that most stocks went on the rise, and will probably continue to do so. This is one area that practically everyone agrees on: health care stocks will continue their upward trend.

According to the New York Times, approximately 10 million more people now have health insurance thanks to the Affordable Care Act. That means that insurance companies are doing well. Aetna is one that has seen huge gains in the past year, and will probably continue to grow.

Keeping an eye on which companies are looking to consolidate and buy up other businesses will give you a good heads-up about which companies are expecting significant growth. Aetna recently purchased Bswift, a technology company that is geared towards providing an online “shopping mall” experience for consumers looking to purchase health insurance.
Platforms of this kind are an up-and-coming area of stocks. You wouldn’t have heard of Bswift five years ago, but now they’re being bought for $400 million. Other companies in this area include HealthEquity, Quadrant 4, and Benefitfocus.

It’s also a well-known fact that the majority of the US population is aging. The Baby Boomers have reached retirement and are now working to stay healthy. That requires doctors, and those doctors require health insurance.

With all the delays that Obamacare has faced since it was rolled out, we’re still looking to see what the full impact will be.

All told, it’s looking to be a pretty exciting year for the US. Oil prices are likely to head back up, but it may take them a bit of time to recover. Meanwhile, health care is only expected to improve, especially as all the kinks are worked out and the full effect of the Affordable Care Act becomes more widely understood.