Ask anyone if they’re a long-term investor and nine out of ten will tell you they are most definitely long-term investors. That is, unless something crazy happens to the market. It’s like the profile pieces you read about someone’s workout and eating regimen. Every minute of the day is carefully planned, and it seems every person profiled sticks to salads topped with salmon and the occasional piece of dark chocolate. In the real-world, life gets in the way, and it gets messy. OK, maybe it’s doable if you don’t have kids, or a job, or grandchildren, or any other fabric of life that makes it … [Read more...]

Is long-term investing dead? You would think so reading even my favored Wall Street Journal as it beats the drum for the future robo-advisors—a model that makes decisions based on an algorithm and human input (a phone rep fresh out of college) to determine your financial future. Sounds good on paper. We’ll see how well they do when markets crater and the phone lines light up like a Christmas tree. It’s happened twice already this century, and that’s when it matters most. Everyone knows that long-term investment success is hard. Maybe not everyone. I’m being too generous. But listen, if … [Read more...]

In The Wall Street Journal, Jason Zweig tells the story of Calpers, the nation's largest pension fund, and the nation's growing investments in private equity. Like Calpers, many pensions are hoping to meet unrealistic return expectations (something I have written about many times, including here, here, here, and here) by investing in private equity. The problem is, it isn't a sure bet that private equity will be able to produce the returns necessary. Zweig writes: Still, the future for private equity might not be as lucrative as the past, with money gushing in and with buyouts priced near … [Read more...]

Writing at Forbes, Elizabeth Bauer asks if Illinois' public retirement system is a pension fund or a pyramid scheme. The evidence doesn't look good. Despite electing a new governor, Illinois seems to be using the same old tactics to plug its pension holes. Bauer explains: Illinois's new elected officials and their advisors simply don't believe that it matters that public pensions are pre-funded.  They view pension funds as something that exists on paper, and pension reporting as a nuisance to be avoided where possible, and ignored otherwise.  Through their actions -- and indeed their words … [Read more...]

In Pontiac, Michigan, pensions for public employees have been underfunded for years, and the city is going to raise taxes to help fund pension payments. This same predicament is playing out across America, with pensions in many states and cities woefully underfunded, and with pension boards who overestimate returns to paper over the problem. Like many pensions, those in Pontiac are restricted on the proportion of assets that may be invested in equities compared to fixed income and other securities. The current limit is 40% of assets may be invested in equities. These limits are in place … [Read more...]

Don't fall into the ESG trap. Read what I wrote here on December 11, 2018. Your wealth manager should act as your fiduciary, plain and simple. Sounds easy. But in reality it’s not. Today, I want to help you overcome one of the more absurd obstacles you may face. It’s called environmental, social and governance investing, or ESG. Thousands of investment managers have pledged to follow ESG—a pledge to abide by a U.N.-sponsored statement of ESG principles. Investing in fossil fuel stocks, for example, would likely be on the “no go” list of companies available for investment. You can forget … [Read more...]