Because this is a really good time to get into the stock market Exclusive:

Yields on 30-year U.S. bonds that fell to a record low of 4.10 percent this year are forcing pension funds to favor equities, corporate debt and commodities in an attempt to cover unfunded liabilities and meet return objectives of about 8 percent. Even the federal government’s own Pension Benefit Guaranty Corp. said on Feb. 19 that it plans to shift $15 billion to stocks from debt. “The reality is there’s not a lot we can do” other than buy high-risk securities to close a pension shortfall in a short period, said Chris McDonough, chief investment officer of the Philadelphia Pensions Department. The sixth-largest U.S. city will probably also issue debt, he said.

Maybe over the long term it is, because the market has already taken a hit. But in the short term it just seems kinda stupid to say “Four percent return isn’t good enough, because we need lots more money, so we’ll take a shot at losing 10-20% of our capital instead.” And the fact that these were some of the same folks that just got clobbered holding pieces of the Big Sh*tpile doesn’t give one a lot of confidence in their judgment. (It’s particularly interesting to see the the guy from Orange County, which is pretty much the poster child for losing your shirt on “sophisticated” investments, saying that stocks and hedge funds are not a good idea.

But what the heck, it’s only a bunch of old people’s pensions. Those folks should have saved for retirement some other way.


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