California Pension Giants Bounce Back

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Thu, 07/22/2010 - 07:35 | 483131 ZackAttack
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And another thing... if things are so goddamned rosy, how come CALPERS had to go back to the legislature to ask for an additional $600m contribution to make up for their shortfall?

No significance to the source, just the first Goog hit:

http://news.suite101.com/article.cfm/calpers-takes-another-600-million-amid-55-billion-in-losses-a238613

They have underperformed the general market for years upon years. Shut down this empire, fire all the parasites feeding on it and hand it over to the goddamned computers.

Thu, 07/22/2010 - 09:47 | 483283 RKDS
RKDS's picture

how come CALPERS had to go back to the legislature to ask for an additional $600m contribution

I certainly don't know if this is the case for CA, but maybe the state/legislature skipped or deferred payments in the past and now CalPERS expects them to hold up their end of the bargain?

Thu, 07/22/2010 - 10:41 | 483367 ZackAttack
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My understanding was, the legislature is making up a shortfall in returns. Not coincidentally, I think, the $600m figure is within an eyelash of how much they lost on their idiotic Stuy Town investment. Transitively speaking, the California legislature paid for the poor judgement of Tishman-Speyer and Blackrock. Good thing Blackrock was able to skim all those tens of billions from those Fed MBS purchases last year.

From the article:

 

The CalPERS board sets a contribution rate that the state has to meet based upon the performance of the fund. The state is required to pay this contribution. The board adopted a smoothing method for contributions to spread out the losses over a longer period of time. Because of this, the state's contribution to CalPERS will increase over the next few years unless stock markets increase significantly from current levels.

 

As long as the California taxpayers are willing to put up with this, that's their problem. It's all good as long as they don't try to make it a federal bailout.

Thu, 07/22/2010 - 09:42 | 483179 Leo Kolivakis
Leo Kolivakis's picture

Things aren't rosy, far from it, but they did bounce back nicely following the disaster of 2008. The structural problems of pension deficits remain. That's why they asked for additional contributions. Even with the bounce back, these giant pension plans are not out of the woods. Hopefully they are better prepared for what lies ahead.

Thu, 07/22/2010 - 13:17 | 483879 CrockettAlmanac.com
CrockettAlmanac.com's picture

Hopefully they are better prepared for what lies ahead.

 

Dow 28,000,000: The Unbelievable Expectations of California's Pension System

 

What Calpers failed to disclose, however, was that (1) the state budget was on the hook for shortfalls should actual investment returns fall short of assumed investment returns, (2) those assumed investment returns implicitly projected the Dow Jones would reach roughly 25,000 by 2009 and 28,000,000 by 2099, unrealistic to say the least (3) shortfalls could turn out to be hundreds of billions of dollars

 

http://online.wsj.com/article/SB1000142405274870331540457525082218925238...

Thu, 07/22/2010 - 11:07 | 483502 4shzl
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Far from rosy = hopelessly underfunded.

Thu, 07/22/2010 - 00:33 | 482881 Pooh-Bah
Pooh-Bah's picture

"We now have in place safeguards to help prevent a repeat of the 2008 market collapse which has hurt all investors large and small"

I am so grateful and thankful that my leaders have now done away with any future market collapses.  I will sleep soundly tonight knowing we are all in such good hands. Goodnight Barry, goodnight Chris, goodnight Barn.

Thu, 07/22/2010 - 00:19 | 482851 Muir
Muir's picture

Thank you Leo.

I for one am glad Calpers made money.

Thu, 07/22/2010 - 07:09 | 483113 masterinchancery
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I hope they keep making it, since otherwise they will be coming to ask the rest of the country for a bailout.

Thu, 07/22/2010 - 00:02 | 482804 Kreditanstalt
Kreditanstalt's picture

None of it matters.  They can't make any money in the larger scheme of things. 

These two monster behemoths are so huge that, together with all other major investors, they SWAMP whole markets and entire asset classes.  They eliminate volatility, crush trading volume and drive genuine small speculators out of the markets...

Though nominal earnings in dollars may increase, REAL earnings (valuable to the retiree recipients in terms of maintained purchasing power) will gradually disappear in the years to come...

This pooling of risk for millions of retirees, with the hope of spendable returns all obtained with trillions in the same investment pools, will gradually prove to be an exercise in ultimate futility. 

Price inflation and/or currency devaluation will eat them alive.  Real returns will approach zero and they will never make up any shortfalls.

The whole construct IS a ponzi scheme!  Can anyone out there see that?  Any hope at all for meaningful real returns requires acceptance of greater risks, great nimbleness and a contrarian investing stance.

And a SMALLER scale! 

Thu, 07/22/2010 - 10:28 | 483381 kaiserhoff
kaiserhoff's picture

Exactly.  Nothing in California is sustainable in anything like its present form, starting with multi-million dollar boxes made of ticky tacky.

Wed, 07/21/2010 - 22:56 | 482660 El Hosel
El Hosel's picture

"Last week, Calpers posted its best returns in 3 yrs as markets gain"

   Markets have gained nothing in 12 years for buy and holders.  If you can beat your meat, you can beat the street.... Ponzi scheme, step right up, there is plenty for all.

   "as Markets Gain" = Bullshit.  "The market" no longer gains Leo, please make a note of it.

 

Wed, 07/21/2010 - 22:56 | 482596 ZackAttack
ZackAttack's picture

Stock holdings earned 14.5 percent and its bonds rose 12.3 percent, the fund reported today. Investments in private equity funds rose 21.7 percent, while real estate fell 12.4 percent.

Meanwhile, the S&P returned 26.46%, long treasuries returned 14.17% and the Vanguard REIT index returned 54.18%.

Dumbfucks. Worse than that, dumbfucks overpaying for underperformance.

With all the millions they pay to financial leeches, how did they do relative to a dead-simple 50/50 stock/bond index allocation? Let me guess... they fucking *underperformed* yet again.

Don't they have ample evidence at this point that they're incapable of outperforming anything, including simple fungi? Why isn't anyone asking these questions in front of the California legislature?

My advice: remove the leeches, fire most of the staff, turn it over to the computers and let them run it for 5 bp a year.

Thu, 07/22/2010 - 08:43 | 483171 Dr. No
Dr. No's picture

+833,000 (the number of teachers in the pension).

Wed, 07/21/2010 - 22:21 | 482546 RockyRacoon
RockyRacoon's picture

When California is doing great it "leads the Nation"!  When it's doing badly it becomes the step-child.  Bad news:  California leads the nation.   Here in the hinterlands we find it takes about 5 years for the California effect to kick in.  I'm getting ready.

Wed, 07/21/2010 - 22:14 | 482524 ZeroPower
ZeroPower's picture

I always buy after these bullshit dips. Step away when Ben speaks, then wait till the close. Good luck to all of you buying SDS or QID, better cover quickly.


Wed, 07/21/2010 - 22:15 | 482529 Nolsgrad
Nolsgrad's picture

BGZ?

Wed, 07/21/2010 - 21:51 | 482460 Nolsgrad
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Leo, still like the solars? what about telecom there? CHTL that thing Tobin Smith likes?

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