On 30 March 2009, Michael Kranish (Boston Globe) wrote Pension Insurer Shifted to Stocks.
This is not good news.
Boston University Finance professor Zvi Bodie, who advised the agency against such a policy, ‘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.’
This is the kind of thing that Richard is always telling me and I don’t want to hear. I always say to myself, “Those academics are always too pessimistic. What do they know anyway?”
Since I have been dabbling in this area for 20 years, I must know more than those who have studied it intensely for longer than that.
I keep harking back to my experience playing bridge. I was often faced with a couple of choices in bidding or playing a hand. I would sit there and think of what could go wrong if I took one path or another. Inevitably, when I chose a path I would see things go wrong in ways I never imagined.
I think the academics are trying to tell me something.