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#11
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![]() I can get the article to appear but not the comments.
Millard's arguments seem pretty weak, essentially "the markets are down, so the PBGC's jumping in." I don't buy that argument with my own money, so I don't buy it for the PBGC's money either. Beyond that, the decision was made before the markets crashed and it was just dumb luck that the money hadn't been moved yet. |
#12
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![]() "Imagine you are a large institutional investor with an investment time horizon that is 30 years or more. "
What makes Mr. Millard think the PBGC has 30 years? "How about closing the deficit with a congressional bailout along with proper risk adjusted premiums going forward?" If the PBGC is the only insurer, what makes Mr. Gold think the proper risk adjusted premiums will be charged? |
#13
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![]() You have to ask who is ultimately guaranteeing the pension benefits. If it's the PBGC, then they should not make their assets riskier. If it's the Federal gov't, then, maybe the PBGC should take steps to reduce their projected deficit, even if that means making the assets riskier.
55% allocation to equities, real estate & private equity just seems way too high for the PBGC though. That's roughly the same as the pension plans they're guaranteeing. A Federal bailout shouldn't happen before it's necessary to liquidate assets at a loss.
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The best time to plant an oak tree is twenty years ago. The second best time is right now. |
#14
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![]() Quote:
If you don't think that losses on plans already closed are a sunk cost, what do you think they are -- an opportunity?
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An exact actuary |
#15
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![]() http://www.ritholtz.com/blog/2009/04...l-corporation/
Perhaps a couple of excerpts from the Globe article will make this concept more clear: “But (Zvi) Bodie, the B.U. professor who advised the agency, questioned why a government entity that is supposed to be insuring pension funds should be investing in stocks and real estate at all. Bodie once likened the agency’s strategy to a company that insures against hurricane damage and then invests the premiums in beachfront property.” “The worst case scenario is coming to pass,” said Mark Ruloff, a fellow at the Pension Finance Institute, an independent group that monitors pensions. He said the agency leaders “fail to realize that they are an insurer of pension plans and therefore should be investing differently than the risk their participants are taking.” |
#17
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![]() PBGC should be shorting the companies' pensions it insures? That seems to be the proper A/L matching strategy.
And how would it do that, except to take opposing positions on all of its insureds' invested assets, I guess, plus base its own premiums charged on an indirectly proportional amount of funding contributions? Disclosure: I don't know squat.
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"Facebook is a toilet." -- LWTwJO |
#18
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![]() No doubt. But if you create something with a purpose and operate it so that it can't fulfill that purpose, I don't want to be liable.
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i always post when i'm in a shitty mood. if i didn't do that, i'd so rarely post. --AO Fan Lucky for you I was raised by people with a good moral center because if that were not the case, you guys would be in a lot of trouble. So be very, very glad people like me exist. Your future basically depends on it. --jas66kent The stock market is going to go up significantly due to Trump Economics --jas66kent |
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