Nevada’s $35B fund manager does as little as possible, usually nothing | Hacker News Reader

Nevada’s $35B fund manager does as little as possible, usually nothing

wsj.com

90 pointsbreck36 comments

"He generally doesn't work outside 8 a.m.-to-5 p.m. hours. He commutes in a 2005 Honda Element with over 175,000 miles on it. His 2015 salary was $127,121.75, according to a Nevada Policy Research Institute database."

Seems like a fairly careful kind of chap.

"Despite the investment success, Nevada only has about 73% of assets needed to fund future retirement obligations to workers."

I'm wondering what they will do about that. Increase contributions to new members? Increase employer's contribution (if any)?

The same that way that all sovereign debt problems are solved - higher taxes if possible and default if not.

Hope no one thinks you are being snarky, but court cases have come to that conclusion more than once and it includes cases where the pension fund lost money in the market or suffered theft. In all cases the taxpayer is on the hook for the difference.

Now a recent case in California suggests that pension agreements can be adjusted but I expect that to lose on appeal. Regardless more states and cities will have to go to court to fix their overly generous pension agreements (even in my state the number of double dippers or pensioners with 70-100k incomes from pensions is high)

UK resident: don't employees pay into their funded pension schemes? Can't employer just up contributions and cut benefits for newly hired ones?

Background: My public sector pension is funded through contributions from employer and employee and benefits paid out of revenue, so no investment or equity. Govt has just increased contributions paid to cover costs. Newer employers work longer to receive benefit (retirement age increased during Coalition government).

PS: not even close to 70K mind you, think factor of 5 to 7 less!

There's two different types of laws in play. One has to do with already accrued and vested pensions. Under federal law those are tangible property that can't be adjusted outside of bankruptcy.

Separately some states, including NY, IL, and CA have state constitutional doctrines that forbid changing the accrual formula for existing employees. This is much more stringent rules, and means that any change will take many decades to work through the system.

I can see that the second regulation would slow down change significantly. The first paragraph I think is fairly general.

>> "Despite the investment success, Nevada only has about 73% of assets needed to fund future retirement obligations to workers."

I'm wondering what they will do about that. Increase contributions to new members? Increase employer's contribution (if any)? <<

Cut taxes which then starts a period of massive economic growth which then will lead to higher tax income?

> Cut taxes which then starts a period of massive economic growth which then will lead to higher tax income?

"Insanity: doing the same thing over and over again and expecting different results."

Ask Kansas how that worked: http://www.kansascity.com/news/politics-government/article73...

> "He generally doesn't work outside 8 a.m.-to-5 p.m. hours. He commutes in a 2005 Honda Element with over 175,000 miles on it.

Really, really strange that both of those things are stated as if they are inherently "bad".

Shouldn't that be the goal of every office worker? Work relatively sane hours and be content with the perfectly functioning vehicle you already have.

I don't think they're stated as bad, just as surprising given common perceptions of people in those roles, which is usually shaped by movies like The Wolf of Wall Street, since most people have no other window into the lives of top-level executives.

Those sound like positive recommendations to me! I guess it's a matter of what you read into it, but I'd be a lot more suspicious of the returns of a fund if the guy running it had a rap artist lifestyle.

As much as I'm a fan of passive investing, I think there are key differences between personal investing and institutional investing. The article mentions that much of the money is in equity indexes. This strikes me as very risky for a pension fund. What if the market tanks? Presumably the value of the fund will plummet, but he fund will still have to pay out benefits. This is the equivalent of buying high and selling low.

A big part of the job of institutional investors like pension funds and endowments is investing in stable, uncorrelated things. This is trickier where it sounds and accounts for at least some of the higher overhead at other state pension funds.

"What if the market tanks?"

It would have to tank long term. If it does, it would take an exceptionally good and somewhat lucky fund manager to constantly find places where the flow goes against the tide and thus still make a good profit. Also, the larger the fund, the larger those places where the flow goes against the tide have to be to make any reasonable impact, and those larger places are rarer.

So, if there is a long term problem, it's hard to avoid. For example, obligations in solid economies are stable income sources, but currently all bring little or no interest. That's something that hits pension funds fairly hard now.

I don't think anything in the article implies next year's payouts are currently in equities.

It seems fitting that the guy from Nevada knows it's better to bet with the house than against the house.

If anyone is curious about their asset allocation, here's a recent document detailing it:

https://www.nvpers.org/public/investments/pers/PERS-Investme...

Pretty vanilla 3-fund portfolio plus 10% split between private real estate and private equity.

I'm a bit surprised that taking the link into Google and clicking on WSJ links from Google don't show the full article anymore.

Incognito works.

Thanks for that.

Does anyone know why Google allows this?

I didnt know this.....thanks for tip. It worked for me on iphone in safari.

You can also click the "web" link at the top of the HN thread. It's worked for me on every WSJ article so far.

Click bait. Doing nothing relates to he fund he's managing, i.e. his trading policy is to do nothing.

The WSJ is not currently in the business of clickbait. This is a substantive article related to the superior passive investment strategy of a state's pension manager.

"What Does Nevada’s $35B Fund Manager Do All Day? Nothing"

This title implies that he manager does nothing all day long. But when you read the article it comes clear that doing "nothing" is his trading policy.

"His daily trading strategy: Do as little as possible, usually nothing."

I consider this a click-bait.

He does nothing like programmers value laziness. It's harder than it sounds.

Definitely. That's why saying "he does nothing" is a bit clickbaity.

Thats impplied that doing nothing is realted to trading imo

Yeah. I read the title and thought "isn't that what everyone says -- just go with the market?"

It's not anywhere close to what most pension funds actually do.

This isn't click bait, it's a headline "joke" which is pretty common even in substantive newspapers and has been for a long time.

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