Posts

Showing posts from September, 2014

Greece at a Breaking Point?

Image
I am off to Greece for the rest of the month so I decided to focus my attention on my ancestral home. Roula Salourou of ekathimerini reports, Pension system nears breaking point:
The ticking time bomb of the social security system will not explode in 2025, but 10 years earlier, or next year, according to a study by the Institute of Labor of the General Confederation of Greek Labor (INE/GSEE) which is to be presented in Thessaloniki on Thursday.

GSEE’s annual report on the Greek economy includes a chapter on the aging population and the sustainability of the social security system from 2013 to 2050. Its conclusions, which Kathimerini has seen, say that the prolonged recession and high unemployment have brought forward the pension system’s crumbling point by a decade and that in order to become viable the system requires additional resources of 950 million euros for 2016 alone.

The system’s extra requirements are expected to grow rapidly in the following years, soaring to 2.67 billion e…

Meet Ontario's New Pension Suckers?

Image
Andrew Coyne of the National Post wrote an op-ed, Forcing Ontario’s chronic under-savers to contribute to new pension plan won’t save money: Among the list of arguments advanced for the proposed Ontario Retirement Pension Plan (ORPP), which with the re-election of the Liberal government will now suck up $3.5-billion of Ontarians’ savings every year to invest on their behalf, efficiency was near the top.

Not only are the province’s hapless citizens chronic under-savers, as the recent budget lectured them, but if left to invest unchaperoned they would simply blow it all on things like mutual funds, with their notoriously high management fees. That much is true: people who invest in mutual funds, of the kind that blanket the airwaves with claims of their superior returns at RSP time, are suckers — of which there are, by one estimate, more than 525,000 added to the population every year.

But the premise, that by forcibly merging everyone’s savings into one big, government-sponsored fund, …

A Tough Year For Stock Pickers?

Image
Jeff Cox of CNBC reports, It's been a tough year for running large-cap mutual funds:
All those headlines about new stock market highs may look sexy, but life for active managers hasn't been quite so much fun.

In fact, running large-cap mutual funds has been a rough business, with about 80 percent underperforming the S&P 500 in 2014, according to S&P Capital IQ Fund Research. That's four out of five managers who've failed to match a simple stock market index fund that usually has lower fees and other advantages.

There are a handful of explanations for why performance has been so weak this year, but at the core seems to be the general and stunningly persistent belief that the market remains ahead of itself, with danger always right around the corner. Fear of a looming correction has kept many investors playing defense.

"We've gone 35 months without a decline of 10 percent or more, and the median since World War II is 12 months," said Sam Stovall, S&a…

Staying Mum on Corporate Expats?

Image
Andrew Ross Sorkin of the New York Times reports, Public Pension Funds Stay Mum on Corporate Expats:
In the outcry about the recent merger mania to take advantage of the tax avoidance transactions known as inversions, certain key players have been notably silent: public pension funds.

Many of the nation’s largest public pension funds — managing trillions of dollars on behalf of police and fire departments, teachers and others — have major stakes in American companies that are seeking to renounce their corporate citizenship in order to lower their tax bill.

While politicians have criticized these types of deals — President Obama has called them “wrong” and he is examining ways to end the practice — public pension funds don’t appear to be using their influence as major shareholders to encourage corporations to stay put.

In the past six months, some of the nation’s largest companies have announced plans to move abroad. AbbVie, a pharmaceuticals company based in Illinois, has agreed to acq…