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Archive for October 10th, 2008

Are We There Yet?

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Like children who start asking that question within the first hour of a long, long journey, similarly clueless are too many stock market analysts puzzling over their “oversold” charts and technical indicators and blackbox models, calling a new “bottom” as each floor flashes past this drop down the elevator shaft, at 12, at 11, at 10, 9, 8 . . .

As margin sales, hedge fund sales, capitulation sales, and every other seller jump on the firesale bandwagon, the sheer volume of this avalanche has now obviously far surpassed the momentum that pension plan reallocations gave to that subprime mortgage crisis slide at the top of this cliff.

But just the same, if leadership in the market is to come from any one sector of investors, pension plans may show us the floor, same as they shoved us over that high edge. Mega-investors like CALPERS might have to fight off critics from all sides once the damage to public employee retirement systems sees the light. But by and large, public funds had not been joining private pension plans’ rush to the exit; and if they keep existing investment policies intact, they’ll even begin pushing new money into equities over the coming year, since the stock market crash leaves them below their target equity allocations.

In fact, the blood on the Street might dampen private pension funds’ own rush from equities, depending on how each pension fund perceives its asset reallocation strategy. If a pension fund has been steering toward a particular dollar amount for its bond portfolio, such as might be the case if the fund is aiming toward an asset matching philosophy as compared with retiree liabilities, then there may still be miles to go before we sleep. Conversely, if a pension fund had expressed its new asset allocation in terms of a revised lower target percentage of total assets to be held in equity investments, then the October 2008 crash has helped achieve that goal simply by lowering all pension funds’ equity allocations via lower stock values. For that matter, even that first strategy – steering toward an asset matching philosophy – might see some slowing of private pension equity sales in the coming months, by virtue of lower retiree liability amounts, as reameasured on the basis of higher corporate bond rates.

Against the tidal wave of equity sales from all other sources, any pension fund re-entry on the buyers’ side of stock exchange floors at first may sound like a whisper too easily drowned out by the flood of screams from lacerated portfolios. But in much the same way as the past year’s pension equity sales have ignored external forces, selling no matter what the market or economy or anything else did, similarly stubborn will be any pension fund buying, once it kicks in. Emotionless. Uninfluenced by herd mentality, independent of whatever government policy is dangled for market bait, shrugging at even the economic indicators. Simply following whatever the pension plan’s investment policy calls for, come what may.

Frankly, I still don’t think we’re there yet, at the floor. And at the rate we’ve been falling, we’re bound to dig a hole a mile deep below the floor once we do hit bottom. All the same, institutional investors will be on hand to make solid purchases once we do get there. So although I myself continue to hold our own personal equity allocation quite nicely at the 0% it’s seved me well at for the past year, I’m starting to like how low the numbers on this free-fall elevator have been getting. Not very long now. Soon, soon.

bumper sticker [] - calls & puts

Written by macheide

10 October 2008 at 2:04 pm

Posted in calls & puts

Desperately Lost

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OK. Still haven’t been pushed far enough away from my Reagan votes to swing over to Obama, not just yet. But McCain’s sure doing a lot more than Obama himself to get me there. For now, he’s convinced me I’d rather abstain than give my vote to the GOP this time around.

Look, the mess that W gave us of foreign policy and the economy and the political world and everything else that matters will pretty much assure us that we’ll be needing a crisis manager around for at least the next presidental term, if not longer. And as if the Palin choice hadn’t already shown us how poor his judgment is, not to mention his dishonesty for pretending his choice was anything other than the cynical political game it misplayed, this cheap dodge we’re seeing during his campaign’s dying moments proves he doesn’t belong behind the wheel when our own ship follows W down.

Keep making those same poor, deluded decisions, and by Election Day I will be casting my vote for Obama, as much as I hate voting for one person just to keep someone else out of office. And for the one or two brainless voters McCain already had in his back pocket, who might shake off their nervousness at his sham long enough to be miscounted as having been swayed by this recent shrill sharpie charade, I can seriously point to a dozen like me whom McCain is turning off, completely off.


bumper sticker [] - jourbeau

Written by macheide

10 October 2008 at 7:04 am

Posted in jourbeau