Looser Regulation Harms Pension Returns
Defined benefit (DB) pension funds promise retirement benefits dependent upon an employee’s earnings history, tenure of service and age. When a DB pension fund is underfunded (when asset values are lower than the value of their liabilities, or the promised...
No, Really: Just Ignore Day-to-Day Stock Market Fluctuations
Early Friday morning, a friend texted me. Here’s what he said: “Will you come talk to my co-workers?! They are talking about stopping their 401(k) contributions because of what’s going on! Driving me nuts!” Still not quite awake, I replied,...
Fama and Booth Weigh In On Brexit
When news of the Brexit vote broke, the financial media went into an overdrive of speculation bordering on hysteria. There was much talk about potentially devastating scenarios, including “turmoil“ to global markets. One investment “pro” counseled investors against buying stocks...
Breaking Down REIT Prices
As with all financial assets, real estate investment trust (REIT) valuations should equal the discounted present value of expected future cash flows. REIT prices thus reflect the growth potential of cash flow (rents, expenses) and/or the time variation in expected...
When Board Members Hurt Returns
The investment policies of state and local government pension systems have shifted markedly in recent years toward alternative investment classes, such as private equity, real estate and venture capital. For example, as of January 2016, the California Public Employees’ Retirement...
