Thursday, December 08, 2011

Pension Assets: Let 'em Burn

Thanks to Bruce for flagging me to Robert Novy-Marx' study of pension accounting.  It's hyper-wonky but it offers the provocative suggestion that we might improve our position with respect to some pension assets by just setting fire to them.

1 comment:

Taxmom said...

I actually slogged through this (not that bad, though I skipped the equations at the end)....fascinating and scary manipulation of risk calculations.

If I understand him right, it's not just that present value calculations for my portfolio will look better if I sell CDs and invest the proceeds in Latin American mining stocks (with a projected annual rate of return of 12% heh, heh); even better if I destroy my CD holdings altogether so that my entire portfolio is comprised of stocks with a 12% projected rate of return.