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Anonymous (not verified) says:
There is very little useful information / analysis about the current financial crisis. It is a serious problem that most media people don't understand finance or business and report accordingly.
A very simple step forward would be to insist that no pension funds are invested in hedge funds or private equity. A simple second step would be to give very good disclosure / information such that any 401K money that is invested in hedge funds or private equity is done so with the explicit, informed consent of the individual.
It is well-established that the best returns on investments over time come from equity funds that are indexed and -- for safety -- treasury bonds. Bigger returns are associated with bigger risks -- in the 90s it was tech stocks, in recent years pension & 401K money has been shifted to the "alternative investments" of hedge funds and private equity.
On one day last fall I was reading the Financial Times. On one page there was an Op-Ed speculating that fully half of hedge funds and private equity funds would be bankrupt / closed within the next few years. In the same edition, I read that pension funds were shifting "their assets" to the same investments to get "higher returns".
Steven Schwarzman sold the bulk of his stake last spring in Blackstone -- one of the biggest and most successful private equity firms that he co-founded. Does any rational person believe he did this because big riches were to be had to the buyers?
It seems somewhat obvious that the last people to enjoy the "higher returns" are the "stupid money" that is invested on behalf of the all of the working and middle class people saving up for retirement.
And these will be the people to lose when these "alternative vehicles" collapse.
It is very complex to deal with the current crisis -- the first pass should be the very simple step to get the average person's retirement out of these highly risky and unregulated investments.
There is very little useful information / analysis about the current financial crisis. It is a serious problem that most media people don't understand finance or business and report accordingly.
A very simple step forward would be to insist that no pension funds are invested in hedge funds or private equity. A simple second step would be to give very good disclosure / information such that any 401K money that is invested in hedge funds or private equity is done so with the explicit, informed consent of the individual.
It is well-established that the best returns on investments over time come from equity funds that are indexed and -- for safety -- treasury bonds. Bigger returns are associated with bigger risks -- in the 90s it was tech stocks, in recent years pension & 401K money has been shifted to the "alternative investments" of hedge funds and private equity.
On one day last fall I was reading the Financial Times. On one page there was an Op-Ed speculating that fully half of hedge funds and private equity funds would be bankrupt / closed within the next few years. In the same edition, I read that pension funds were shifting "their assets" to the same investments to get "higher returns".
Steven Schwarzman sold the bulk of his stake last spring in Blackstone -- one of the biggest and most successful private equity firms that he co-founded. Does any rational person believe he did this because big riches were to be had to the buyers?
It seems somewhat obvious that the last people to enjoy the "higher returns" are the "stupid money" that is invested on behalf of the all of the working and middle class people saving up for retirement.
And these will be the people to lose when these "alternative vehicles" collapse.
It is very complex to deal with the current crisis -- the first pass should be the very simple step to get the average person's retirement out of these highly risky and unregulated investments.