Thought lefty Cali in trouble from debt? Take a look at their PUBLIC pension debt.

NigelTufnel said:
The funny thing about that is that a large portion of the underfunded liabilities are due to market losses on investments by the pension funds.
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When you promise the workers generous pensions you're not going to earn those type of returns leaving their money sitting in a savings account.

And these funds were still well underfunded even before the market crashed a couple of years back.
 
cawacko said:
When you promise the workers generous pensions you're not going to earn those type of returns leaving their money sitting in a savings account.

And these funds were still well underfunded even before the market crashed a couple of years back.
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When the state's funding a pension they may as well "invest" the money by having the seniors spend it, boosting the economy, and then tax it back once they need it again. That's basically the investment that SS makes. Putting it in an investment bank is more complicated and subject to shock.
 
cawacko said:
When you promise the workers generous pensions you're not going to earn those type of returns leaving their money sitting in a savings account.

And these funds were still well underfunded even before the market crashed a couple of years back.
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I'm simply pointing out how fucking stupid the "socialism" charge is.

There are lots of investment opportunities that provide low risk and reasonable rates of return that are not savings accounts. In fact, the study that is cited in the OP notes that these funds could achieve over 7% annual returns, just about their target rates of return, by investing in corporate bonds while avoiding the risks associated with other types of investments.

And yes, these funds were underfunded before these losses. I'm not suggesting otherwise. The problems with these flow from insufficient contributions and investment losses.
 
Bittermark said:
When the state's funding a pension they may as well "invest" the money by having the seniors spend it, boosting the economy, and then tax it back once they need it again. That's basically the investment that SS makes. Putting it in an investment bank is more complicated and subject to shock.
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Before I got let go last year I was working for a pension advisory investment management firm. Our largest client was California State Teachers (CalSTRS) but we had a dozen other pension funds we were advisors for.

We had some great returns for CalSTRS in the mid 2000's and then things all went to hell in '08 and '09.
 
cawacko said:
Before I got let go last year I was working for a pension advisory investment management firm. Our largest client was California State Teachers (CalSTRS) but we had a dozen other pension funds we were advisors for.

We had some great returns for CalSTRS in the mid 2000's and then things all went to hell in '08 and '09.
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So you're the guys that fucked it up?
 
NigelTufnel said:
So you're the guys that fucked it up?
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Haha! There were others with far worse returns than us. Some guys had several billion dollar funds that returned nothing, not even the principal. Real estate is a tangible asset. How the hell do you not have anything remaining in your fund?
 
We did make big investments in land in the Inland Empire in areas deemed in the "path of growth". Well once the market tanked that "path of growth" became years and years away and the value of that land obviously became worth a lot less.
 
cawacko said:
We were getting 40% to 50% returns in 2005 - 2007 in the I.E. and no one was complaining then.
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Thanks for making my point. I was on here saying the long term real estate return was 6 percent and a regression to mean was inevitable. Sometimes great investing is not what you buy but what you stay away from. I didn't touch real estate until after the crash, and I didn't buy dot.com in the 90's. too many used car salesman were hired on wall street and in Cali
 
Topspin said:
Thanks for making my point. I was on here saying the long term real estate return was 6 percent and a regression to mean was inevitable. Sometimes great investing is not what you buy but what you stay away from. I didn't touch real estate until after the crash, and I didn't buy dot.com in the 90's. too many used car salesman were hired on wall street and in Cali
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Well part of it is the client. CalSTRS hires us to invest their money. We are not forcing them to invest in real estate. They have the capability to tell us not to buy. And when you say you were buying real estate I assume you mean like REIT stocks correct? You're not out buying office and industrial buildings.
 
Yeah I worry about how my pension is managed. I thin we go much more conservative. I bought vnq just trading in and out over the last year and made a few grand. But that's play money my retirement is in oil and s&p 500.
 
cawacko said:
Well part of it is the client. CalSTRS hires us to invest their money. We are not forcing them to invest in real estate. They have the capability to tell us not to buy. And when you say you were buying real estate I assume you mean like REIT stocks correct? You're not out buying office and industrial buildings.
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But you're the expert.
 
Southern Man said:
But you're the expert.
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CalSTRS (and other pension funds) determine their investment allocation internally (broken down between bonds, stocks, real estate etc.)

In the real estate space they usually hire consultants who help them determine which advisors (like my company) they want to use. CalSTRS also determines its own investment strategy such as do they want to pursue more core assets (buildings close to being fully leased; less risk less return) or more value add strategy (buildings that need to be leased up; more risk higher returns).

Once we get those marching orders from them we then go looking for assets in the market that match CalSTRS return parameters. It's our job then to know the markets and the players in each market and be able to dig up deals for CalSTRS. Before we make any purchases CalSTRS has to sign off on the deal as well.

I'm not trying to absolve my company and myself from what is going on but I am showing how the process works.
 
cawacko said:
CalSTRS (and other pension funds) determine their investment allocation internally (broken down between bonds, stocks, real estate etc.)

In the real estate space they usually hire consultants who help them determine which advisors (like my company) they want to use. CalSTRS also determines its own investment strategy such as do they want to pursue more core assets (buildings close to being fully leased; less risk less return) or more value add strategy (buildings that need to be leased up; more risk higher returns).

Once we get those marching orders from them we then go looking for assets in the market that match CalSTRS return parameters. It's our job then to know the markets and the players in each market and be able to dig up deals for CalSTRS. Before we make any purchases CalSTRS has to sign off on the deal as well.

I'm not trying to absolve my company and myself from what is going on but I am showing how the process works.
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How much geographical diversification did you have? I assume you were buying throughout the country?

Colorado's teachers pension plan did the same thing. That is one of the stupid things about the pensions, they set such stringent restrictions on how much real estate they could hold. Here it was 40%. So of course when the stock market tanked, their equity percentage tanked pushing the real estate portion way above the limits.... forcing them to sell... at one of the worst times in the past 40 years.

They are currently revising their guidelines to try and prevent such an occurrence from happening again.
 
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