CalPERS Calls The Top: Largest Public Pension Fund Mulls Dumping $50 Billion Of Stocks

Tyler Durden's picture

Is the largest public pension fund in the United States getting ready to dump about $50 billion worth of stocks?  According to a new note from Bloomberg, CalPERS' board is meeting for a workshop today in Sacramento to discuss asset allocations for the upcoming year which could include a doubling of the fund's bond allocation from 19% to 44% which would be funded with a massive $50 billion sell down of equities.

Calpers is looking at a menu of options for its fixed-income target ranging from the current 19 percent to as much as 44 percent, according to a presentation for a board workshop in Sacramento coming up Monday. Equities could be cut to as little as 34 percent from 50 percent. Stocks were the best-performing asset class in fiscal 2017, returning almost 20 percent.


“The markets have had a pretty good run and it’s possible Calpers staff is thinking this might be a good time to lock in some of the gains,” Keith Brainard, research director for the National Association of State Retirement Administrators, said in a phone interview.


Unfortunately, as we've noted before (see: CalPERS Board Votes To Maintain Ponzi Scheme With Only 50bps Reduction Of Discount Rate), a shift toward higher fixed income allocations may require a simultaneous decrease in the fund's discount rate assumptions which could drastically increase contribution requirements from various public employers all around the Golden State.

“We’ve cut the return expectation to the point that employers are screaming, ‘We can’t afford it. We can’t afford it,’ ” Jelincic said. “I personally would be willing to take on a little more risk.”


The average allocation for public pensions is about 23 percent to fixed income and 49 percent to stocks, according to Nasra data.


The Calpers board is scheduled to vote on the allocation in December. Almost all of the fixed-income and stock holdings are managed in-house while more complex assets, such as private equity and real estate, are overseen by outside consultants. Allocations to private equity and real assets would stay at 8 percent and 13 percent, respectively, under all scenarios under consideration.


The allocation revisions occur every four years. Calpers is working to provide for a growing wave of longer-living retirees.

Of course, while a more conservative asset allocation may be warranted in the current bubbly equity environment, often logic is quickly dismissed by politicians when it's implementation could expose a massive ponzi scheme that has been hiding in plain sight for decades and risks the financial solvency of local and/or statewide government entities. 

This battle between math/logic and politicians has played out numerous times in states all across the country and somehow we suspect that "math/logic" will continue to lose...better to bury your head in the sand for a couple of more years and pretend there is no problem.

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khnum's picture

....and its gone!

YUNOSELL's picture

Why are they announcing this? They're hoping the FED will print them some bribe money to not sell?

khnum's picture

Lawyer and fund manager feeding frenzy in 3,2,1

Stuck on Zero's picture

They announced it because they are probably on a short straddle and expect to gain from a dump. If they were smart they'd buy a lot of PMs like Texas did.

spastic_colon's picture

this is a secret code for the fed to continue to pump equities until they can get their 50 Billion out.........amongst expect NO correction for at least another 90 days.

Gap Admirer's picture

Note how they refused to do it during Dear Leader Obama's rule. Can't be having a market crash on His watch. With Dear Leader gone leftists will now do whatever it takes to destroy the country.

The_Juggernaut's picture

If anyone's dumb enough to think they can call the top it's these idiots.  This is the most bullish signal ever.

zorba THE GREEK's picture

What they should do is sell everything and buy gold and silver. That would cause the PMs to go up and bring more pension funds to buy PMs which would cause PMs to go up even more and attract more buyers. Kind of like Bitcoin...only gold and silver are real assets and are way undervalued so (unlike stocks and bonds which are both bubbles) they have plenty of room to run. But instead they will buy the debt of bankrupt entities at extremely low yields.                                               








overbet's picture

Sell your winners and buy what to make up the returns? Freeroll on the bailout

Paul Kersey's picture

No entity, large enough to dump $50 billion in stocks, would be stupid enough to announce it publicly. However, it is the State of California, so all bets on logic are off.

GUS100CORRINA's picture

BUY, BUY, BUY ... The CBs have your back. 

Selling is a SIN or at least that is what we were all told.


jcaz's picture

It's cute that they think that they have a say in the matter......

secretargentman's picture

It's just a matter of time before it's illegal to sell without a permit. Unregulated selling can cause market crashes you know. Women and children hardest hit. 

Chauncey Gardener's picture

Well, they're not. It's CA, remember?

Dead Canary's picture

They are announcing it now to git the shitty-ist possible price.

ACP's picture

CALPERS should put 100% of their money in MBS.

khnum's picture

sunni money the wahabi blockchain...Im liking it

secretargentman's picture

How about some Venezuelan bonds?

Utopia Planitia's picture



Dragon HAwk's picture

I don't always make big Financial moves, but when i do i tell everyone ahead of time.

VWAndy's picture

 So they are going long what? Bonds hahahahahaha ! Hey I got an idea! Bit coins yea yea thats the ticket! lol

silverserfer's picture

watch for disinfo agents to suddenly apear to presuade them to stay in equities. 

cherry picker's picture

Bitcoin will go up to $100 K and it will take a week to post a transaction and if you want it faster, the fee will be 10% of the total transferred and hopefully it wont have crashed to $5K when it comes time to cash out those digits :)

adr's picture

If it drives AMZN down to fantasy levels instead of galactic insanity, I'm all for it. 

AMZN at $80 sounds about right, that's what a more "normal" 35 P/E? 

TheSilentMajority's picture

Calpers is going all-in on Coinbits!

Rex Andrus's picture

Moonbeam the killer.

Blue Steel 309's picture

They can invest it in importing more mexicans.

directaction's picture

They have a lot of faith waiting until December ... 

Captain Mack's picture

I live in NorCal and cant wait to watch Calpers collapse!! Every government drone libertard and various other corrupt agency bloated ticks are betting on this scam to payoff for them when they are done screwing everyone else in this state, in what they say is just doing their job.

Don Sunset's picture

Moonbeam is going to tax you a lot more while you wait and watch.

steelhead23's picture

Thank you for pointing that out.  Pay attention folks, state employee pension funds have us all by the balls.  First, pols and city managers larded on future benefits (early retirement, high payout) to provide services today without ringing the tax bell now (Let the next fucker figure that out).  The funds were encouraged to use optimistic return rates to lessen the current burden on the state and municipalities.  And we all know that CalPers was scammed a while back.  Think you could just say fuck off to the retirees?  Think again.  Contract law is on their side.  Even if the pols suddenly get the message and cut servicess and salaries, these legacy obligations could bankrupt the cities.  Hence, if you live and pay taxes in Cali and you want CalPers to collapse, you are an idiot.

Blankenstein's picture

No, the tax bell was already being rung.  To fully ring it and pay for everything would have required citizens paying 80% of their incomes in taxes.  Wouldn't have gone over to well now would it?

The gooberment employees allowed their votes to be bought and the politicians didn't hold up their end of the bargain.  Too effing bad. Maybe they should't have been so greedy and put their failth in slimey politicians.  These entitled .gov assholes didn't care one iota about the taxpayers who have been paying big taxes all along.  And now they want the tax slaves to pay in moar and moar to make their golden pension whole, so they retire in style at the age of 55.  F that.

Don Sunset's picture

Mission accomplished (for this cycle?

The 401k crowd, with their recurring bi-weekly buys of overpriced stocks, has extended the life of numerous pensions.  Pensions should get the hell out if they are still in the market.

Now the FED drops the markets and pensions buy back in.  All the while, the 401k crowd continues with their buying of lower priced stocks up to the point they're way too high again.

Repeat.  401k bagholders abound.

The 401k crowd is getting suckered in this attempt to save the pension funds and others.


dark pools of soros's picture

just put it all on black.. if it comes up red sue the casino for being racist, especially if it's in an Indian reservation casino

HRH Feant2's picture

I love playing roulette. It is a great game to play with a group. My limit is $20. If I can play for two or three hours I am entertained. That was the point, yes?

mb's picture

Since when has Calpers ever done anything right?

Pareto's picture

Sure, why not, let Yellen hold onto that shit for a while.

1 Alabama's picture

This is a stick up, give me all your money.

BurningBetty's picture

I am sure Black Rock aka The Fed & SNB will take them off Calpers hands with no downside to the market. It's the Monopoly way; The bank has unlimited funds!

mb's picture

"the markets have had a pretty good run"


yeah, 10 yrs 

Look at bond performance for last 10 yrs, and stock performance

truth is, calpers has lost their arse relative to everything else by only being 50% stocks


Pension funds dont "lock in gains"


Truth is, NO ONE knows the future except the Fed and Goldman Sachs . 

Any money really guessing...and gambling....with other peoples money

some get lucky...some dont.

My sibling was fired after losing millions for a pension fund.   Wasnt lucky.


A buddy of mine that was a financial consultant ran out of room filling out his job once on a form we both filled out for background checks.

He only had enoug boxes to write FINANCIAL CON

I said"Sounds right to me"


hola dos cola's picture

Fantastic cartoon!

Salsa Verde's picture

They will waste it all; INSTANTLY!

JibjeResearch's picture

You guy missed it.  Here it is....

The money will go into Puerto Rico and turn it into an East Coast Hawaii...

This is the perfect time to get into PR.

SmittyinLA's picture

Calpers is liquidating California, the "loot by owning equities" model takes too long, they got bigger plans for that cash, and it's not cash.

Rick Cerone's picture

What's wrong with EPS manipulation via buybacks?

Everything is fine.

buzzsaw99's picture

so their current discount rate assumption is that stocks and bonds will keep going up at the current rate forever?