I was enjoying a lunchtime read of an Institutional Investor piece on Orin Kramer and his attempts to beat some sense into the New Jersey Pension Authority or whatever it's called, which has long managed its own money in-house (i.e. nothing in funds of any sort). Given Kramer's reformer's zeal and serious pedigree, I reckoned it might be a place for someone like myself to earn bread fixing processes and whatnot.
Then I kept reading. There's a lot of pushback against Kramer from unions, fear he's gonna put too much money in hedge funds etc. In fact, the unions resist putting money in funds since they see it as outsourcing and, get this, the investment staff of 65 is unionized! That's the stupidest thing I've heard in a long time. Securities analysis and trading are not functions subject to collective bargaining. You should be able to fire these people at any time, and their comp should be based on individual performance. Otherwise why would they bother pushing themselves to do well?
This is a sure recipe for disaster for New Jersey and its pensioners, but nothing surprising from out most opaque neighbor to the south, Trenton. Would that it were Kramer vs. Kramer.
Monday, August 13, 2007
Protecting the Innocent
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1 comment:
Why is it that the grouse berates NJ pension fund managers for being conservative with other people's money and also grouses about the average joe having to provide liquidity for the aggressive managers who squander rich people's wealth in opaque hedge fund crap? If some greedy fool wants 30% returns in any market and then tries to pull their money when they lose then screw market liquidity and let the bastard go bankrupt (and the bank that made such a poor decision can lose its shirt too). Or is it that the central bank's job is to use conservative taxpayer's money to bail out other investors' poor choices?
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