Physician financial services bulletin: "no financial crisis"

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peter31's picture
peter31
Status: Bronze Member (Offline)
Joined: Apr 1 2009
Posts: 33
Physician financial services bulletin: "no financial crisis"

Good morning

Today I received the following email from my physician financial services organization (I am a physician in Canada).  Basically it says "don't worry, there is no financial crisis, normal growth will continue". 

I can't remember ever having previously received an email telling me there is no financial crisis.  Does this mean that actually, there is a financial crisis?

Worried, Ontario.

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Update: global stock market volatility

Market volatility reflecting a crisis of confidence among investors

We have witnessed dramatic global stock market volatility recently, following a string of weaker than expected economic reports and the aftermath of the U.S. debt ceiling vote.

While market volatility can be worrying, it is important to remember that we are not in the midst of a financial system crisis, an economic crisis or a debt ceiling crisis; it is a crisis of confidence. Our fragile global economy is still reliant on prudent policy-makers making the right decisions. When this is not the case, stock markets will respond quickly and show a lack of confidence. In 2008, by contrast, stock markets responded when the world's financial system was immobilized as a result of the failure of Lehman Brothers and subsequent liquidity problems.

Standard & Poor’s downgrades U.S. long-term rating

After the markets closed on Friday, August 5, 2011, the rating agency Standard & Poor's announced that it had downgraded the long-term rating on U.S. sovereign credit from AAA (highest rating) to AA+ (one step lower, but still "investment grade"). The other two major ratings agencies, Moody's and Fitch, did not downgrade the U.S. debt rating. It is possible that equity markets have already built this into prices; however, we will continue to monitor the markets. As The Wall Street Journal noted in a weekend article, "Experience also shows that a downgrade doesn't have to be catastrophic for government debt. When S&P downgraded Japan early last decade, yields on Japanese government bonds had a muted reaction and 10-year government bonds remain around 1% today."

Our belief that growth in the global economy is highly dependent on policy-makers taking appropriate action was echoed by Standard & Poor’s announcement: "The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed." This emphasizes that the current investment market situation is a crisis of confidence.

A soft patch in the economy—not a meltdown

Today, despite the economic uncertainty, many companies in Canada and around the world continue to deliver strong growth in earnings. Economic indicators may be weak, but they are not in recession territory. The banking system is relatively healthy, and bond investors still consider United States Treasury Bills to be a safe haven. We see this situation as more of a soft patch than a meltdown.

Keep checking the "economic updates" section of our md.cma.ca website, as we will be posting additional information as necessary.

Downside protection built into our portfolios

In times like this, well-diversified portfolios tend to perform well. We have constructed our MD funds and pools with a downside protection bias, enabling them to respond to market downturns more effectively.

Late last week, we consulted directly with our investment managers, who tell us they remain true to their investment philosophy and believe in staying the course. They continue to focus on the characteristics that drive returns over the long term, and some are even looking for investment opportunities that offer long-term value. This approach, combined with our diversified portfolio investing method, provides a strong strategy during turbulent market conditions.

If you have any questions about this recent market volatility and its potential effects on your portfolio, please speak with your financial advisor and visit our website, md.cma.ca, regularly for additional information.

William R. Horton, Jr., CFA
Chief Investment Officer
MD Physician Services Inc.
 

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
Re: Physician financial services bulletin: "no financial crisis"

Does this mean that actually, there is a financial crisis?

Yes.

 

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
Joined: Jan 4 2009
Posts: 2606
Bizarre....
peter31 wrote:

Good morning

Today I received the following email from my physician financial services organization (I am a physician in Canada).  Basically it says "don't worry, there is no financial crisis, normal growth will continue". 

I can't remember ever having previously received an email telling me there is no financial crisis.  Does this mean that actually, there is a financial crisis?

Worried, Ontario.

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peter31 -

Your gut is correct and you have every reason to be worried.  This bulletin strikes me as being self serving - as in, "Don't take your money out of our organization or we will lose our commissions and management fees."  DId they send you a similar email in 2008 when the other "non crisis" financial meltdown occurred?

There is a financial crisis, growth is anything but "normal" (although it will become the much lower, new "normal"). 

Unless he can show you some concrete evidence to support the claims in the newsletter, I would consider firing Mr. William R. Horton, Jr.

jumblies's picture
jumblies
Status: Silver Member (Offline)
Joined: Jun 13 2010
Posts: 244
The current financial system

The current financial system is based on fiat money. From Investopedia:

What Does Fiat Money Mean?

Currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith.

So your email said...

peter31 wrote:

While market volatility can be worrying, it is important to remember that we are not in the midst of a financial system crisis, an economic crisis or a debt ceiling crisis; it is a crisis of confidence.

So this is a crisis of confidence in a financial system based on faith. Yep, time to be worried.

 

Travlin's picture
Travlin
Status: Diamond Member (Offline)
Joined: Apr 15 2010
Posts: 1322
Bingo

Jumblies

That was truely excellent.

Travlin 

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