Friday, August 19, 2011

CalPERS Rides Out Big Waves?

Thursday's market drop marked the fifth time in just two weeks that the Dow Jones industrial average rocketed up or down by several hundred points in one trading session. Below, Spencer Michels reports on how the California Public Employees' Retirement System, one of the largest U.S. institutional investors, is handling the volatility. Please pay close attention to what CalPERS' CIO, Joe Dear, says about high-frequency trading and how he worries more about the European debt crisis, two topics that I covered on Thursday here and here. I thank Jack Dean of PensionTsunami.com for forwarding me the interview below.

It's clear that global pension funds, sovereign wealth funds, insurance funds, endowment funds, mutual funds, hedge funds have all suffered savage losses in the last few weeks. And my gut tells me they're going to be buying high beta stocks to make up for these losses. But Europe has to get its act together or else it's pretty much downhill from here, and all institutions will lose trillions while high frequency traders will make a killing. In the meantime, Keep Calm and Carry On. ;)

Watch the full episode. See more PBS NewsHour.

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