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.
Thursday, December 08, 2011
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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.
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