Uncertainty and Opportunity Lie Ahead in 2009

As 2008 grinds to a close, economic uncertainty has reappeared in a big way after 7 bullish years. Physicians will face a host of challenges in 2009, including continued declines in reimbursement, a new administration likely to increase taxes on capital gains and high earners, and the possibility of sweeping changes to our healthcare system on the distant horizon.

Looking ahead to next year and beyond, I’d be very surprised to see the markets make a swift recovery, due to the many systemic problems afflicting our credit markets; shaken investor confidence; the worsening credit crunch; and the looming prospect of liberal economic policies that would further stifle healthy innovation and entrepreneurship. Government intervention and “stimulus packages” are unlikely to have the anticipated results.

Free market systems, when left alone, are nimble and self-correcting. Governments, by their nature, are not. Thus, the recent slashing of the Federal Reserve target interest rate to near zero gives me pause. The measure is designed to reduce the cost of borrowing for households, businesses, and financial institutions, in an effort to encourage credit seekers. This is the right strategy for right now. What concerns me is that the policy will be expanded and left in place too long, introducing a long period of inflation.

A recent Wall Street Journal (WSJ) editorial made the point that what is missing from the economy right now isn’t liquidity, but investor confidence. The WSJ instead argued for a major tax cut. According to the writers, “…The $2.2 trillion question is whether [The Fed] is willing to act fast enough to withdraw all of this liquidity once the economy turns up.” History tells us that swift corrective action is not standard operating procedure for Uncle Sam.

Of course, a down economy isn’t all doom and gloom for the savvy investor. Recent articles from Physicians Financial News, including the 3-part series “Making Money Now” by contributor Shirley M. Mueller, M.D., show where opportunities are for those who are looking. At PFN, our singular goal is to be your go-to resource for all things financial—whether they relate to your money, your practice, or your life. We’ll be following the economic news and political developments closely, always keeping the impact on you, the physician, top of mind.

In 2009, we’ll be ramping up our coverage with more of what you’ve asked for: financial experts who can analyze and advise on the unique issues you face as a physician investor. In the first quarter, we will also be announcing an exciting new content partnership and reintroducing a regular feature that many of you have asked us to resurrect from the print edition of Physicians’ Money Digest, “Ask the Financial Expert.” I hope you’ll take advantage of this feature in 2009 by sending your questions to PFN editor Bill Schu at bschu@mdng.com.

Most of all, I wish all of you a warm, safe, happy, and healthy holiday season.