I am known to occasionally throw zingers at my colleagues from time to time. One recent example was my proclamation to a rather bright yet puzzled actuary that the theory of constant energy applies to investment management. The theory of constant energy is quite simple: energy cannot be created or destroyed—it is simply moved around. […]
In November 2009, I questioned if the pension industry is an example of ‘The Peter Principle’ in action. In other words, has the pension industry been promoted to its own level of incompetency? My conclusion was no, due to the very difficult and prolonged landscape presented by low interest rates for defined benefit pension plans. […]
Given the chance to peer into the future, employers from the mid-20th century likely wouldn’t recognize the employer benefits programs they pioneered. After the post WWII boom, governments needed to stabilize prices by restricting wage increases but tended to leave non-inflationary issues alone. This prompted employers to begin providing paid vacations, medical and dental benefits […]
As I finalize preparations for a presentation on the importance of financial literacy, I am struck by the sheer magnitude of the challenges ahead for the Task Force on Financial Literacy (TFFL). This group is responsible for presenting recommendations for a national strategy on financial literacy to the Federal Minister of Finance by the end […]
More than a year has passed since September 2008, when no end seemed in sight. Remarkably ,the financial world has returned to its former glory with hardly a memory of the past. Excessive executive compensation; bailed out firms thriving, failing or asking for more money; spectacular equity results; and mind-boggling bond returns are just a […]
While markets have generally performed well year to date in 2009, the sting of late 2008 through early 2009 remains prominent in many investors’ longer term portfolio valuations. The term ‘systemic risk’ has gained a great deal of attention by regulators and other interested parties as a way of learning from the latest financial crisis […]
Most plan sponsors take a top down approach to investing which starts with an asset allocation decision between equities, bonds and alternatives. This allocation is typically based on the results of an asset-liability modeling study or an asset allocation study. The next step is to diversify the manager structure that fills in these asset classes […]
When I worked in manager research, I kept two logs. The first log, which I no longer actively maintain, was comprised of the old business cards of people moving from one investment manager to another; I thought they could be handy in the event that an industry roast might benefit with some employment history (note […]
As we embark on 2009, it’s easy to play the blame game for the financial mess we find ourselves in. There are several lessons to be learned from the events of the past six months about capital markets, the economy and the continuing global credit crunch through the medium of the fraudulent actions of one […]
As we continue through these challenging financial times, I get asked some pretty interesting questions. Many of these questions relate to the decline of the financial engineering empire as we know it—the re-engineering of global financial institutions, the disappearance of formerly global brands (e.g., Lehman Brothers and AIG), and government bailouts in staggering dollar amounts. […]