Surgery News - December 2008 - (Page 8) 8 FINANCE COVERING YOUR ASSETS SURGERY NEWS • D E C E M B E R 2 0 0 8 Bearing Up in a Bleak Economy he sharp drop in portfolios and retirement accounts in recent months BY CHARLES D. has everyone MABRY, M.D., FACS worried. At the end of October, global equity markets were down roughly 40% from their highs of the previous year, and U.S. T equity markets plummeted 25%. In a previous article (“Have They Rung the Bell Yet?” SURGERY NEWS, May 2008, p. 19), I explained that the stock market typically leads the way into and out of a recession, and it appeared then that we were in the early stages of a bear market. The current recession is obviously more widespread and deeper than we’ve seen, requiring unprecedented government intervention into U.S. and foreign credit markets alike. Thus, the length and range of this recession and accompanying bear market will be longer and perhaps deeper than usual. If history is prologue, many will panic, sell all that they have in the market, and go to cash. Many of us are asking, “Is this the bottom, or is there a bottom?” I believe that if the bottom of the U.S. market is not already here, it is certainly close by. The fate of global markets is less certain. What do we know about the economy the American College of Surgeons, Division of Education The outstanding 34-year reputation of Selected Readings in General Surgery (SRGS) for surgeons and residents continues. Published by the American College of Surgeons, Division of Education, SRGS offers the same high-quality content, put into practical applications and various viewpoints. New from SRGS Selected Readings in General Surgery AMERICAN COLLEGE OF SURGEONS DIVISION OF EDUCATION and financial markets that may give us a clue about the future? Historically, the start of a new bull market and economic cycle has occurred when valuations are normal to low, but also when most investors are the least likely to invest in the market. Fear is high, and the outlook is bleak. However, our current market valuations are now coming back into a reasonable value range, which will form the basis for a future sustained rise in the market. Government intervention will shore up the markets and ideally will help prevent future financial damage. So while there is certainly downside risk, I believe that most of the pain is already past us. Going to cash after taking a hit in stock market declines not only will lock in your losses, but also may cause you to miss the largest gains in equities typically seen in the early days of a new bull market. Now is the time to reassess your portfolio and proceed cautiously. If you haven’t used asset allocation for your portfolio, you should (see “Allocation Tips for Financial Success,” SURGERY NEWS, July 2007, p. 23). If your assets are allocated, rebalance your portfolio with an eye toward safety. Large corporations can usually weather a recession, and therefore have an early advantage coming out of one. Increase your holdings of government bonds, and avoid riskier “high-yield” commercial bonds. If you invest in foreign equities, choose large, megacap stocks with solid performance. If you invest in mutual funds or exchange-traded funds instead of individual securities, make sure the funds in your portfolio have these same characteristics. If you also have allocations for small-cap stocks, emerging markets, and other assets, you should underweight them until the early stages of a bull market emerge. These asset classes will typically drop further in price, and ultimately will represent a good bargain. A year from now, it will be time to rebalance and further reduce risk to your portfolio. ■ DR. MABRY serves on the finance committee and investment subcommittee of the ACS Board of Regents and is the series editor for the ACS Practice Management Course for Residents and Young Surgeons. Why subscribe? SRGS provides: A monthly editorial review and analysis of a major topic area in surgery, culled from more than 200 current articles. A carefully selected group of full-text reprints from current, classic, and seminal articles. Also cited are articles that contain common errors in analyses and interpretation of data. Feedback and advice from a diverse Editorial Board of leading surgeons with extensive knowledge of gastrointestinal surgery, transplantation, vascular surgery, trauma/critical care, pediatric surgery, and other specialties. An analytic review of the entire specialty of surgery published every two and a half years. This new, compressed cycle covers a topic twice within five years, offering continuity of learning and retention. Commentary on advances in basic sciences—providing a more complete understanding of surgical problems. An online CME program where you can earn credits that meet the requirements of Part II of the American Board of Surgery’s Maintenance of Certification program. Five Worst Bear Markets: 1929 to Date –83% Sept. 1929–June 1932 –48% Jan. 1973–Oct. 1974 Subscribe today! Visit www.facs.org/srgs/ or call 800/631-0033 to learn more. –34% Aug. 1987–Dec. 1987 ELSEVIER GLOBAL MEDICAL NEWS –49% Mar. 2000–Oct. 2002 –42% Oct. 2007–Oct. 2008 Note: Based on the Dow Jones Industrial Average. Source: Dr. Mabry http://www.nxtbook.com/nxtbooks/elsevier/sn0508/index.php?startid=19 http://www.nxtbook.com/nxtbooks/elsevier/sn0508/index.php?startid=19 http://www.nxtbook.com/nxtbooks/elsevier/sn0508/index.php?startid=19 http://www.facs.org/srgs/
Table of Contents Feed for the Digital Edition of Surgery News - December 2008 Surgery News - December 2008 Contents The 20/20 Vision: Health Reform News From the College: Nominations Thoracic: Breathing Easier Postop Management: Renal Failure Surgery News - December 2008 Surgery News - December 2008 - Contents (Page 1) Surgery News - December 2008 - Contents (Page 2) Surgery News - December 2008 - Contents (Page 3) Surgery News - December 2008 - Contents (Page 4) Surgery News - December 2008 - Contents (Page 5) Surgery News - December 2008 - The 20/20 Vision: Health Reform (Page 6) Surgery News - December 2008 - The 20/20 Vision: Health Reform (Page 7) Surgery News - December 2008 - The 20/20 Vision: Health Reform (Page 8) Surgery News - December 2008 - The 20/20 Vision: Health Reform (Page 9) Surgery News - December 2008 - News From the College: Nominations (Page 10) Surgery News - December 2008 - News From the College: Nominations (Page 11) Surgery News - December 2008 - Thoracic: Breathing Easier (Page 12) Surgery News - December 2008 - Thoracic: Breathing Easier (Page 13) Surgery News - December 2008 - Thoracic: Breathing Easier (Page 14) Surgery News - December 2008 - Thoracic: Breathing Easier (Page 15) Surgery News - December 2008 - Postop Management: Renal Failure (Page 16) Surgery News - December 2008 - Postop Management: Renal Failure (Page 17) Surgery News - December 2008 - Postop Management: Renal Failure (Page 18) Surgery News - December 2008 - Postop Management: Renal Failure (Page 19) Surgery News - December 2008 - Postop Management: Renal Failure (Page 20)
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