Pension Pulse

The more I read about Madoff, the angrier I get. This con artist not only screwed over his fellow Jews , he also screwed over many innocent victims of all faiths who benefited from the charities his clients set up. Ripples from the Madoff scandal have spread everywhere , including Harvard's Medical School and pension funds . But as bad as the Madoff scandal is, it pales in comparison to the greatest Ponzi scheme that is still going on today - the pension Ponzi. Stick with me, I will explain my reasoning below. First, this article from Jay Ambrose, Madoff only the No. 2 Ponzi scheme : It's an astonishing story. This seemingly trustworthy guy named Bernard Madoff was supposedly investing something on the order of $50 billion for some of America's richest people, pretended it was earning gobs of interest, actually used the principal of some to pay others wanting redemptions – and lost practically everything. Here's a more astonishing story. Our seemingly benevolent federal...

Yesterday I commented that most funds of hedge funds will have a hard time surviving in 2009. Not only are hedge funds folding at a record rate, but their extra layer of fees and the Madoff scandal will hit many of them very hard. Today, I want to closely examine the private asset classes, namely private equity and real estate. I know they are going to get clobbered in 2009 and their lagged valuations will only prolong their pain. I will, however, end this post with a comment from a former colleague of mine, Jean-René Guilbault, who is an expert in institutional real estate. He was a Real Estate Manager and member of the investment and management real estate committee at PSP Investments. He has since moved on to better things but I asked him to share with me his thoughts on the US real estate market. Let's first begin with private equity. Last week, Jeremy Coller, the chief investment officer of Coller Capital, said that underperforming private equity companies will disa...

Wall Street extended its losses Thursday, as a negative ratings outlook on financial and industrial powerhouse General Electric Co. shook an already fragile investor psyche and sent stocks tumbling : After moving within a narrow trading range for much of the session, the Dow Jones industrial average dropped about 220 points. The broader Standard & Poor's 500 index lost more than 2 percent. Stocks struggled to find a direction in the early going Thursday as investors sifted through a number of economic indicators, including more layoffs and dismal earnings forecasts. But a negative ratings outlook on GE from Standard & Poor's added further pressure on the market. The ratings service lowered its outlook on GE and its GE Capital finance arm to negative from stable. S&P affirmed their Triple-A ratings, but said there is a one-in-three chance they could lose them because of the ongoing financial struggles at GE Capital. GE shares fell $1.43, or 8.2 percent, to close at $...

A late sell-off in financials dragged US shares lower as investors worry there are few quick fixes for either banks or the economy : Also weighing on the financial space was disappointing financial results from Morgan Stanley, though a new credit agreement for retailer Macy's helped offset some of the market's weakness and drove consumer companies higher. For financials, declines included big drops for Fifth Third, down 48 cents, or 6 per cent, to $7.51, and PNC Financial Services Group, down $3.22, or 6.5 per cent, to $45.98. Many of the companies in the financial sector had rallied broadly yesterday in the wake of the Federal Reserve’s interest-rate decision, though such an unprecedented move was viewed by many on Wall Street today as an indication of just how dire the economic picture is. And even though the move boosted certain areas of the credit markets, it will take months before the total force of the action filters its way onto banks' balance sheets and spurs lend...