Wednesday, August 21, 2013
Eliminating The Middlemen
A recent article indicates that big institutional investors are empowering themselves to make their own markets instead of continuing to depend on Wall Street. But the members of the Institutional Investors Roundtable don't appear to include CalPERS. However, in 2011 CalPERS joined with other institutions and they have been making some progress toward the larger and very challenging goal of sustainable investing. But I hope they also liberate themselves from Wall Street, and invest in Main Street where most retirees live.
Tuesday, April 30, 2013
CalPERS Check-Up
CalPERS vital signs may be showing some improvement lately. For starters, the Board raised the rates for employers, that is, the multitude of state and local agencies which depend on it for pension investments. As ably explained by Ed Mendel, the pain needed to ensure adequate funding will be phased in over several years. Hopefully agency budgets will withstand these extractions.
And of course, this still optimistically assumes a 7.5% average return for the foreseeable future. JJ says no prob, all the big institutional investors are equally optimistic. Maybe so, but i hope it's not for the same bad reasons - that lower and more rational forecasts would cause too much pain.
Moreover, CalPERS may be getting a least a bit serious about sustainable investments. I recently got wind of a Symposium, co-sponsored by CalPERS and UCD Graduate School of Management, to be held in early June. It sounded interesting enough that I submitted a paper, but since they picked only 7 out of almost 100, I can't feel that disappointed at being rejected.
Still, after reading the titles of the selected papers, I felt relieved at being left out. The titles themselves are already pretty foggy, and the less obscure titles led to abstracts that left me almost completely in the dark. I have a hard time believing that the Board will be able to really understand them without translation, and I can only hope that CalPERS executive staff will be able to a) understand them, and b) explain their meaning to the Board. Maybe they could even explain it to me.
Personally, reading the titles made me feel like I was watching someone move the Titanic's deck chairs into esoteric arrangements designed to help the authors get tenure. While these papers are probably not wrong, I just can't convince myself they're really on the right track for the post-fossil-fuel future that would be our best investment.
And if CalPERS does actually decide to disinvest in fossil fuels, as some advocate, they will need a whole lot of sustainable investments to replace current fossil fuel investments, given the latter's huge role in our economy.
Are my ideas for post-fossil-fuel investments any better than the fancy academic ones? Maybe - you can judge for yourself. But I am sure that they are more understandable, even for PhD.s in economics.
And of course, this still optimistically assumes a 7.5% average return for the foreseeable future. JJ says no prob, all the big institutional investors are equally optimistic. Maybe so, but i hope it's not for the same bad reasons - that lower and more rational forecasts would cause too much pain.
Moreover, CalPERS may be getting a least a bit serious about sustainable investments. I recently got wind of a Symposium, co-sponsored by CalPERS and UCD Graduate School of Management, to be held in early June. It sounded interesting enough that I submitted a paper, but since they picked only 7 out of almost 100, I can't feel that disappointed at being rejected.
Still, after reading the titles of the selected papers, I felt relieved at being left out. The titles themselves are already pretty foggy, and the less obscure titles led to abstracts that left me almost completely in the dark. I have a hard time believing that the Board will be able to really understand them without translation, and I can only hope that CalPERS executive staff will be able to a) understand them, and b) explain their meaning to the Board. Maybe they could even explain it to me.
Personally, reading the titles made me feel like I was watching someone move the Titanic's deck chairs into esoteric arrangements designed to help the authors get tenure. While these papers are probably not wrong, I just can't convince myself they're really on the right track for the post-fossil-fuel future that would be our best investment.
And if CalPERS does actually decide to disinvest in fossil fuels, as some advocate, they will need a whole lot of sustainable investments to replace current fossil fuel investments, given the latter's huge role in our economy.
Are my ideas for post-fossil-fuel investments any better than the fancy academic ones? Maybe - you can judge for yourself. But I am sure that they are more understandable, even for PhD.s in economics.
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