Support our online development, and advance our onground research initiatives in free market economics, as we seek to showcase the brightest Next-Gen minds.
THE ME-P DISCLAIMER: Posts, comments and opinions do not necessarily represent iMBA, Inc., but become our property after submission. Copyright © 2006 to-date. iMBA, Inc allows colleges, universities, medical and financial professionals and related clinics, hospitals and non-profit healthcare organizations to distribute our proprietary essays, photos, videos, audios and other documents; etc. However, please review copyright and usage information for each individual asset before submission to us, and/or placement on your publication or web site. Attestation references, citations and/or back-links are required. All other assets are property of the individual copyright holder.
Understanding Risks and Benefits
By Dr. David Edward Marcinko MBA CMP™
According to Wayne Firebaugh CPA, CFP®, CMP™ rebalancing a private physician’s portfolio or medical endowment contradicts conventional market “wisdom” that you allow your winners to run. Perhaps in speculation this is true, but for investing such a view can be deadly.
One Healthcare Case Example
Take, for example, the Cleveland Clinic’s experience with its endowment. In 1999, the Cleveland Clinic Foundation reported $1.2 billion in investments. Unfortunately, by the end of 2002, the Foundation’s investments were valued at $650 million, a loss of approximately 50%. Its losses reflected its substantial allocation into technology stocks during the technology boom of the late 1990s. As a result of these investment losses, the Clinic had to postpone a planned $300 million cardiology center and certain debt financing had to be restructured. In addition, both Moody’s and Standard & Poor lowered their ratings on the Clinic.
Definition
Since rebalancing by definition requires an endowment to take money from more successful investment classes and invest it into under-performing classes, it will always cause some measure of anguish. There will always be some reason why rebalancing should not take place. In 1987, the unprecedented single day decline in the market could have been presented as an argument against moving into equities. In 1998, the seemingly endless number of world financial crises could have provided a useful excuse to avoid rebalancing into emerging markets. So too; the flash crash of 2008!
Assessment
Current bond prices could provide similar reasons for not rebalancing into an appropriate fixed income position. However, since the whole reason for asset allocation policy decisions is to mitigate the negative impact that irrational behavior can have on a portfolio or an endowment’s investment performance, they should include a process for periodic rebalancing of its assets.
Conclusion
Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
LEXICONS: http://www.springerpub.com/Search/marcinko
PHYSICIANS: www.MedicalBusinessAdvisors.com
PRACTICES: www.BusinessofMedicalPractice.com
HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
ADVISORS: www.CertifiedMedicalPlanner.org
BLOG: www.MedicalExecutivePost.com
Share this:
Filed under: Investing, Portfolio Management | Tagged: Investing, medical endowments, Portfolio Rebalancing, Wayne Firebaugh |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
Size Really Does Matter
We all surmised that size does matter when it comes to investors’ assets; especially affluent doctors and the size of their em’-ah’ accounts.
Now, brokerage firms are implementing new programs that push their financial advisors [aka product salesmen, brokers] to get rid of at least some smaller client accounts with few financial assets.
http://www.fa-mag.com/fa-news/6432-broker-firms-getting-rid-of-little-guy.html
So, doctors beware! Size always matters.
Edwina
LikeLike
Fall 2011
[As we finish-up the mid-fourth quarter]
Third-quarter gross domestic product was revised downward, largely the result of a decline in inventories that nevertheless bodes well for future production.
Weighing on the markets were government debt-related events: the failure of the congressional deficit-reduction “super-committee,” the continuation of Europe’s fiscal dilemmas, and the Federal Reserve’s announcement of forthcoming stress tests for 31 U.S. banks.
What a holiday season-NOT!
Dr. David Edward Marcinko MBA CMP™
[Publisher-in-Chief]
http://www.CertifiedMedicalPlanner.com
LikeLike
Emerging Eastern Economies to Drive Global Wealth Flow
Dr. Marcinko – A lot that will come about in 2012-15 in the wealth management space will be initiated from the emerging Eastern economies. There is no doubt that these developing nations will drive the global wealth. Investment strategies have undergone remarkable changes after the global recession and the most significant of all is the diminishing interests for investing in western economies. Global investment flow is largely directed towards the emerging economies of Asia and Middle East, wherein the growth opportunities are comparatively larger. According to the Global Wealth Report by Credit Suisse Research Institute, one billion individuals located in the growing economies hold one-sixth i.e. USD 32 trillion of global wealth.
Recession is expected to be the key driver for steep wealth growth rates in emerging nations. According to an investment consulting firm, Mercer, investments in emerging countries are largely driven by strong economy, better governance, positive demography, stable politics and expanding capital market access. Wealth managers are strategizing to catch up fast with the remarkable upward trend of investments in the top Asian wealth management markets, specifically, China, Hong Kong, Japan, India and Singapore.
In order to tap the investment opportunities, global wealth management giants such as Credit Suisse, Deutsche Bank and many more are planning to strengthen their branch network and increase operations in these emerging markets. They have either already opened or are planning to open their regional offices and mark their presence in Asia and the Middle East. Beyond the enhancement of regional presence, wealth managers are also planning to develop customized accounts specifically focused on investment themes of consumers in emerging economies.
IMHO: This strategy is a clear sign of wealth management industry’s long-term commitment to investors in the growing economies.
Sheldon
LikeLike