Posted on 10/23/2008 5:47:37 AM PDT by TigerLikesRooster
CalPERS may increase employers' contributions
Associated Press
Thursday, October 23, 2008
The nation's largest public pension fund, the California Public Employees' Retirement System, said Wednesday that employer contributions may increase beginning in July 2010 if the fund's investments sustain their current losses of about 20 percent.
CalPERS said in a statement that employer rates may increase between 2 and 4 percent, starting July 1, 2010, for state and schools and July 1, 2011, for public agency employers, if the value of the fund's assets fall by 20 percent or more.
Ping!
I wonder how much exposure CalPERS had in commodity index funds.
Right! They were supposed to be heavily long oil... so HAHA!
Harvard endowment got hit real hard....so I’m hoping
They had a fair bit - and they increased their exposure in 2006, I think. I had a really bad feeling about it then:
http://www.calpers.ca.gov/index.jsp?bc=/about/press/pr-2006/nov/pilot-commodities.xml
Commodities markets are where amateurs gets their pockets cleaned. When know-nothings get into the commodities markets, they get sent home broke. The CBOT/Merc’s are not the place for people who just ‘think’ they understand what is going on. These markets/exchanges are for varsity-level traders.
CalPERS was clearly not the A-league. Their stupidity was clearly evident for all to see - they called their plays “investments.” Commodities are not “investments.” Never have been, never will be. One can invest in the companies that make/use commodities, but not commodities themselves.
ie, “invest in gold” is an oxymoron. For those who believe otherwise, let’s change the commodity in question:
“invest in wheat.”
Doesn’t have quite the same ring to it, eh?
Or how about:
“invest in pork bellies.”
By now, most rational people are saying “Uh, wait a minute.... what sort of ‘investment’ is this?”
That’s the proper reaction.
Of course, they could have hired Hillary Clinton for investment advice in the cattle futures market.
Jack
I couldn't agree more and that's why I can't stand people like Jim Rogers and George Soros, and W gets an honorable mention for having a commodities bubble on his watch.
When inflation takes over and the dollar goes to hell,
GOLD will be the answer.
If the dollar goes to hell, steel and lead will be the answers.
Gold will be optional and used much less frequently.
Good comments about Calpers but I would think they would hire (invest in) a really good commodity trading firm or hedge fund and not do it in-house
Define “good commodity trading firm.”
And while there are such things, certainly, guess where you tend to find them?
And while there are such things, certainly, guess where you tend to find them?
You have a point there
But then there were/are hedge funds and other closed funds that claim commodities and futures expertise.
CALPERS must have picked the wrong ones based on kickbacks, bribes, being wined and dined, cocaine and prostitutes
If this didn't go on at CALPERS it sure goes on with Wall St and in all levels of government
Lost of retarded business decisions are made because of kickbacks from contractors etc
Actually, until very recently, hedge funds didn’t do much in commodities. The Goldman black box operation traded commodities, and several other i-banks had commodity trading desks/advisors, but the hedge fund industry wasn’t really in the game, because until about 2003, you could take on less risk with greater reward in equities or debt products.
Since 2003, the number of hedge funds playing commodities exploded. And a lot of these hedgies forgot one very important thing: commodities tend to revert to a mean trend line. The parabolic spikes in prices we’ve seen in the last 20 months are simply NEVER sustainable in commodities.
As I’ve said here on FR before: Show the American farmer a profit, and he’ll show you a surplus. The only reason for all the yap-flapping over ag softs last year at this time was not ethanol&corn, but disruptions in exports from other countries into the world markets. This caused prices in such things as wheat to spike upwards.
Far too many hedgies (and others) trading commodities thought the following about commodities/commodities markets:
a) That commodities are an “investment.” Not so.
b) That they could enjoy ever-higher prices, that this idea of scarcity was a viable investment thesis. (eg, “Peak oil”) Wrong. Malthusians have ALWAYS been wrong.
c) That with leverage and dark pools, they could prevent getting taken down by other hedgies. Again, wrong. Sooner or later, bubbles pop, and they find you regardless of where you’re hiding.
Some of the expertise that an outfit like CalPERS could hire would be the commodities groups out of shops like Goldman, Citi, et al. And guess what? Because they’re part of the same outfits that also bought into stupid debt paper, the commodities get sold ruthlessly into declining markets because commodities are more liquid that stupid debt paper. As a result, the commodities portfolios are taking hits. The only way this would have been avoided would have been by going with a commodities firm out of the midwest, there commodities are all they do, and they’re a lot less cocky about their trading because commodities are often all they do, and they’ve seen people get their heads ripped off and handed to them in a grocery sack.
The hedge fund and i-bank boys really didn’t understand the very nature of commodities at all. Claiming commodities expertise can mean that the firm knows how to execute commodities trades and positions. It doesn’t mean that they’re possessed of the fundamental knowledge of the nature of commodities the way, say, a farmer is.
Do you mean bullets? If things get that bad, then gold
coins are the only thing that will work!
Yes, I mean bullets.
No, gold coins won’t work very well then. You can’t buy a loaf of bread with an ounce of gold - unless you’re willing to part with an extreme amount of money. You’ll have to exist in a world where a majority of the morons you encounter every day are willing to use a credit card to buy a cup of coffee. The credit card companies try to stigmatize people who use cash and thereby “hold up the line.”
What BS. Do you seriously think in such a society that they’re going to accept gold or silver? Nah. Ain’t gonna happen until such time as they start starving. You want that point in time to occur without YOU starving.
But let’s say you want to revert to a metallic “TSHTF” standard. You’re going to need silver dimes, quarters, dollars, 0.25. 0.5 and 1oz gold pieces. For larger denominations, I’d recommend “good delivery” bars, probably certified by Johnson-Matthey or a similarly known referee assay house. Am I saying to not own ANY gold? No, having some “fondle factor” metal around is always good. You should not be planning on buying your day-to-day necessities with gold bullion coins, however.
Before you get to the point where you can spend hard metallic currency, you’re going to have to survive a period of complete instability. And gold ain’t gonna help you do that, at all. You’d better be thinking in terms of steel - tools (including guns) with which you can make or do most anything you need done.
People who keep hyping gold don’t think about logistics very much. They think that paper money is magically going to disappear and a suddenly enlightened populace is going to say “Why, yes, I will take your 0.9999 fine bullion coins and provide change!”
Hah. Ain’t gonna happen.
Here’s what people should be thinking about - supply logistics. They should be thinking about failures in their supply chains, failures of various service providers, manufactures, institutions, etc. Folks should be thinking about how they live with less “pay to have XXX done” or “pay for XXX pre-made” and start thinking about how to either do without or make it for themselves. Most people, esp. in urban and suburban areas have no clue just how tenuous their supply chains are, and they continue to piss away money and wealth on complete nonsense, rather than insuring that they are more independent of calamities and disruptions.
For example: For the life of me, I cannot fathom why people give money to an outfit like Starbucks for a cup of burnt, over-extracted coffee. Huh? WTF? Get some beans, grind them up yourself, pour some boiling water over them and enjoy. This ain’t rocket science, and no one needs a some “barrista” with blue and magenta hair to pour them a cup of coffee-colored swill. Yet there are some people forking over $5/day, five days a week on their way to work to get a cup of Starbucks swill. Figure 20 working days per month, times $5, and we’re talking $100 per month for burnt, over-extracted coffee. That’s $1200 per year.
Why not brew your own, buy a good stainless steel (see my point about steel above) thermos and take it with you? Wha-la, the need for 1.5 ounces of gold per year just disappeared. That’s also a whole lot of money that could be put into tools, supplies, stored food, etc.
Examples abound. People should buying pre-prepped food and learn to cook. My favorite recommendation for people is to learn how to use a dutch oven, so if things ever get really bad, you can cook with a bed of coals from scrap wood, etc.
People in this country piss away enormous amounts of wealth on truly silly and superfluous nonsense. Folks need first to excise this silly crap from their lives and conserve their wealth, because it is quite likely that we’re not going to see another period of wealth creation such as we’ve seen since 1983 for a very, very long time.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.