Financial Markets in Crisis

They’re calling it “Black Monday” as the TSX and Dow Jones dropped over 500 points each in a single trading day – the largest single day decline since 2001.  I think it’s really the first time that we’re seeing the true globalized affects of the US sub-prime mortgage lending and credit crisis.  Unable to garner government assistance like Fannie Mae and Freddie Mac have in recent weeks, Lehman Brothers Holdings Inc. filed for one of the largest historical bankruptcies of $70billion after failed attempts to build capital or find a buyer.  Merrill Lynch is being snapped up by Bank of America at a “discount”.  And today’s big headline is American International Group Inc. (AIG) and whether they can raise the $40billion capital they need with a declining credit rating.

What we’re doing here at JSJ:

For our investors, we’ve always approached the investment part of your plan with a long-term and moderately conservative view.  With that in mind, we’re preventing significant loss by staying away from US equities and remaining with companies that have limited or avoided their exposure to the sub-prime mortgages from the beginning.  Can we all remain unaffected by this global crisis in the financial markets?  No.  But we’re taking the steps to explain that this downturn in the market is not permanent, will have ripple effects, but also gives opportunity for significant long-term growth for those buying into the “right” funds right now.

What if you’re a client of AIG Life of Canada? AIG Life of Canada is a separate legal entity and as policyholders you are unaffected by the goings-on of American International Group Inc. on a global front.  Please read this letter sent by the President and CEO of AIG Life of Canada.

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