CalPERS as GM. Comatose,stumbling towards doom

Calpers bought shares in 112 REITs prior to market collapse.

The largest U.S. public pension fund bought shares of 112 real estate investment trusts in the third quarter with a combined value of about $482 million as of Sept. 30, according to a regulatory filing. The holdings are now valued at about $245 million.

It’s difficult to comprehend stupidity and recklessness of this magnitude. CalPERS bought risky real estate investments as that market was clearly tanking, and managed to lose half the money in a matter of weeks. Yes, it’s still a paper loss, but real estate isn’t coming back to where it was for probably years. Why didn’t they just go to cash instead?

They’ve lost a total of 20%, over $50 billion, so far this fiscal year. Management seems content with emanating the sort of blather that GM did for years, bland pronouncements about how long-term prospects are fine, just fine, and that they see no pressing reason to awaken from their slumber.

But GM is a car company. CalPERS is managing retirement money. Yet they have been taking crazy risks with that money. IMO, their entire management needs to be fired and replaced with people with actual competence and concern for pensioner’s retirements.