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Can anyone explain how / why the Firemen's retirement system is involved in this? > As Frankel wrote in her article, the lawsuit, which was originally filed by

by Zaheer 7y ago

Can anyone explain how / why the Firemen's retirement system is involved in this? > As Frankel wrote in her article, the lawsuit, which was originally filed by the Firemen’s Retirement System of St. Louis, could be worth billions:

jcims 7y ago
Probably just the first ones to pull the trigger. I don’t understand what the lawsuit is about though, seems like they are just complaining about performance of the acquisition? People just drunk on Oracle koolaid?
redwood 7y ago
Pension funds typically are some of the largest institutional owners of major public companies.
- adw 7y ago
  You can connect the SV housing bubble fairly directly to pension funds piling money into tech stocks and venture capital after the late-00s global financial crisis (because bond yields were in the gutter and they're more or less obliged to seek returns somewhere, and they weren't available in less risky instruments). Same kind of problem Berkshire Hathaway has; once you're big enough, available returns are limited by how much you yourself distort the market. Pension funds used to be able to buy almost limitless bonds in order to lock in annuity returns, but a) a bunch of them are a long way underwater and b) the effective rate of interest on bonds was below zero so they were forced to seek riskier assets, bidding up the price on those, which... etc etc etc. Capital concentration – huge pension schemes, enormous corporations, big university endowments – has weird effects and it happens in all kinds of places.
  - pm90 7y ago
    I wonder what would be a good way to deploy that concentrated capital. Essentially, it’s the combined labor of a large pool of people, hoping that their capital will be deployed in places where it will earn great returns. What happens when these pockets of wealth don’t have anywhere to go? Related: pensions are out of fashion in the US. Where is the wealth of young Americans going nowadays?
    - ummonk 7y ago
      >Where is the wealth of young Americans going nowadays? 401k / ira though more commonly paying down student debt.
    - pianoben 7y ago
      Rent, healthcare, etc. Some have 401k accounts, if they are lucky, otherwise you have IRAs which have an annual contribution limit of $6000, IIRC (am not an expert and am likely wrong on that point). Pensions are unavailable and housing is out of reach for most.
    - neom 7y ago
      Most Americans don't have student debt to pay down (44million), nor a 401k (55million). Most young Americans are just trying to get by, I'd imagine "wealth" isn't a reality for most, outside of maybe emotional wealth.
    - toomuchtodo 7y ago
      There are few, if any, productive ways to deploy those huge swaths of capital that can command the risk adjusted returns those funds seek. See: negative yields on bonds across the world, and VC gambles.
    - hermitdev 7y ago
      I'm 38 and have a pretty good salary. About 50% after tax goes to rent, 25% goes to paying down debt inherited from getting married and medical bills (previous employer had shit insurance). The last 25% is what we live on for essentials (insurance, gas and tolls to go to work, utilities, food, etc). My wife and I have long ago paid off out student loan debt. We have 10s of thousands in high interest, unsecured debt. Debt, that in theory we could pay off tomorrow from savings. However, since most of my savings (my wife has none) is spread across 2 401ks, a Roth IRA, a traditional IRA and a taxed investment account, and I work for an investment fund, I'm subject to all sorts of lockups, retention requirements and blacklists on trades on securities held by my employer. Tl;Dr; I have savings to cover my debts, but cant legally access most of it. I'm not unhappy that I got married, but I didn't consider the financial repercussions before I went through with it.
  - johnvanommen 7y ago
    > Capital concentration – huge pension schemes, enormous corporations, big university endowments – has weird effects and it happens in all kinds of places. That reminds me of the market for exotic cars. Twenty years ago, the market had completely collapsed. The dot com bubble had popped. You could get used Ferraris for under $100K. Fast forward to 2019, and Bugatti is offering new cars for four million and up. Something's gotta give.
  - lotsofpulp 7y ago
    >so they were forced to seek riskier assets By using erroneous assumptions about future investment gains, corrupt investments causing losses, and governments choosing not to invest any money into the pension fund in the first place. All self afflicted, all avoidable if people would acknowledge that they don’t have the ability to predict investment returns 20+ years into the future.

by Zaheer 7y ago

jcims 7y ago

Probably just the first ones to pull the trigger. I don’t understand what the lawsuit is about though, seems like they are just complaining about performance of the acquisition? People just drunk on Oracle koolaid?

redwood 7y ago

Pension funds typically are some of the largest institutional owners of major public companies.

adw 7y ago
You can connect the SV housing bubble fairly directly to pension funds piling money into tech stocks and venture capital after the late-00s global financial crisis (because bond yields were in the gutter and they're more or less obliged to seek returns somewhere, and they weren't available in less risky instruments). Same kind of problem Berkshire Hathaway has; once you're big enough, available returns are limited by how much you yourself distort the market. Pension funds used to be able to buy almost limitless bonds in order to lock in annuity returns, but a) a bunch of them are a long way underwater and b) the effective rate of interest on bonds was below zero so they were forced to seek riskier assets, bidding up the price on those, which... etc etc etc. Capital concentration – huge pension schemes, enormous corporations, big university endowments – has weird effects and it happens in all kinds of places.
- pm90 7y ago
  I wonder what would be a good way to deploy that concentrated capital. Essentially, it’s the combined labor of a large pool of people, hoping that their capital will be deployed in places where it will earn great returns. What happens when these pockets of wealth don’t have anywhere to go? Related: pensions are out of fashion in the US. Where is the wealth of young Americans going nowadays?
  - ummonk 7y ago
    >Where is the wealth of young Americans going nowadays? 401k / ira though more commonly paying down student debt.
  - pianoben 7y ago
    Rent, healthcare, etc. Some have 401k accounts, if they are lucky, otherwise you have IRAs which have an annual contribution limit of $6000, IIRC (am not an expert and am likely wrong on that point). Pensions are unavailable and housing is out of reach for most.
  - neom 7y ago
    Most Americans don't have student debt to pay down (44million), nor a 401k (55million). Most young Americans are just trying to get by, I'd imagine "wealth" isn't a reality for most, outside of maybe emotional wealth.
  - toomuchtodo 7y ago
    There are few, if any, productive ways to deploy those huge swaths of capital that can command the risk adjusted returns those funds seek. See: negative yields on bonds across the world, and VC gambles.
  - hermitdev 7y ago
    I'm 38 and have a pretty good salary. About 50% after tax goes to rent, 25% goes to paying down debt inherited from getting married and medical bills (previous employer had shit insurance). The last 25% is what we live on for essentials (insurance, gas and tolls to go to work, utilities, food, etc). My wife and I have long ago paid off out student loan debt. We have 10s of thousands in high interest, unsecured debt. Debt, that in theory we could pay off tomorrow from savings. However, since most of my savings (my wife has none) is spread across 2 401ks, a Roth IRA, a traditional IRA and a taxed investment account, and I work for an investment fund, I'm subject to all sorts of lockups, retention requirements and blacklists on trades on securities held by my employer. Tl;Dr; I have savings to cover my debts, but cant legally access most of it. I'm not unhappy that I got married, but I didn't consider the financial repercussions before I went through with it.
- johnvanommen 7y ago
  > Capital concentration – huge pension schemes, enormous corporations, big university endowments – has weird effects and it happens in all kinds of places. That reminds me of the market for exotic cars. Twenty years ago, the market had completely collapsed. The dot com bubble had popped. You could get used Ferraris for under $100K. Fast forward to 2019, and Bugatti is offering new cars for four million and up. Something's gotta give.
- lotsofpulp 7y ago
  >so they were forced to seek riskier assets By using erroneous assumptions about future investment gains, corrupt investments causing losses, and governments choosing not to invest any money into the pension fund in the first place. All self afflicted, all avoidable if people would acknowledge that they don’t have the ability to predict investment returns 20+ years into the future.