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Someone once told me that a stipulation for public service should involve converting all your holdings into index funds only. Thought that was an interesting pr

Someone once told me that a stipulation for public service should involve converting all your holdings into index funds only. Thought that was an interesting proposal.

jrockway 5y ago
Not sure that's necessarily fair. If you're 75, you probably don't want your retirement nest egg in 100% stocks. There isn't a policy congress could institute that guarantees stocks will retain their value in a 4 year window.
- neogodless 5y ago
  Index funds can hold other assets than equities, including bonds.
- jonas21 5y ago
  There are bond index funds too.
  - dhosek 5y ago
    Exactly. My retirement funds have exactly two securities in them: A stock index fund and a bond index fund.
- sideshowb 5y ago
  You could add the option of federal bonds then
- officeplant 5y ago
  If they're 75 they should focus on retirement.
  - googlryas 5y ago
    Or - run for President!
  - skohan 5y ago
    Yes frankly a lot of the US' problems are probably related to the fact that it's governed by people who won't be living there in 20 years
- DavidPeiffer 5y ago
  Index funds aren't necessarily 100% stocks. A basic target date fund will taper down the stock percentage as you get closer to the targeted retirement date, not to mention the myriad of dedicated bond funds with every focus/tilt you can imagine.
  - deleted 5y ago
    [deleted]
mywittyname 5y ago
Hi Senator, congratulations on the election results! I'm u/mywittyname with Beutsche Dank I run an index fund for senators. How it works is, you give me a call anytime you hear about an opportunity and my team of crack investors will look into it, making the trade if we feel it is a good fit. We currently have 200 congresspeople on board and have been beating the S&P500 benchmark by 500% annually. It's a $1,000,000 minimum, but we can line up financing if you can't swing that just yet.
- bern4444 5y ago
  Even better, our fund is indexed against the positions of members of congress. Members can paper trade and we index against their decisions.
- nightski 5y ago
  Index funds are typically passively managed unlike mutual funds. I'm not saying what you are suggesting is impossible, but generally it would go against the definition of an index fund.
  - mywittyname 5y ago
    Index funds allow for options to be traded using the underlying holdings. This is one of the ways a specific index fund can outperform (or underperform) the index. Trading options on sure things can easily generate >10,000% returns in a matter of days if the swing is large enough. All it takes is a few of these sure things a year to generate staggering returns. Imagine what you could do with $100,000 in options contracts if you knew about the next Lehman Brothers collapse. That particular event turned a $0.01 option into $50-75, the on the flip side, the manager could offer OTM puts on existing holdings that would practically nullify any loses. Granted, you don't get a LB-level event every year, but there's always a few pretty good ones each year.
- N0tAThr0wAway 5y ago
  Index/bond funds are openly (all the holdings are open to public inspection) and passively managed. What you're describing is a mutual fund.
dragonwriter 5y ago
> Someone once told me that a stipulation for public service should involve converting all your holdings into index funds only. For most elected officials (that have broad scope of potential jurisdiction and thus are almost impossible to avoid conflicts of interests), blind trusts are probably even better. For most public servants, even those that have decision-making authority that could potentially raise conflict interests, disclosure and recusal rules are probably all that is needed (and, actually, lots of public servants have no decision–making authority that is likely to even require that.) Appellate and Supreme Court judges could arguably fit in either category; trial court judges seem squarely in the second.
- N0tAThr0wAway 5y ago
  >For most elected officials (that have broad scope of potential jurisdiction and thus are almost impossible to avoid conflicts of interests), blind trusts are probably even better. Most elected officials (almost all federally) already employ blind trusts. >For most public servants, even those that have decision-making authority that could potentially raise conflict interests, disclosure and recusal rules are probably all that is needed (and, actually, lots of public servants have no decision–making authority that is likely to even require that.) True there are many levels and for lower level (comptrollers and such) that is probably fine. For senators, representatives, judges, etc. the index/bond fund would be even better than the blind trust, since these index funds are publicly inspectable, passively managed, and anyone can buy them.
renewiltord 5y ago
Just make them have to declare at buy/sell time. That will allow instant information transmittal through the market.

Someone once told me that a stipulation for public service should involve converting all your holdings into index funds only. Thought that was an interesting proposal.

jrockway 5y ago

Not sure that's necessarily fair. If you're 75, you probably don't want your retirement nest egg in 100% stocks. There isn't a policy congress could institute that guarantees stocks will retain their value in a 4 year window.

neogodless 5y ago
Index funds can hold other assets than equities, including bonds.
jonas21 5y ago
There are bond index funds too.
- dhosek 5y ago
  Exactly. My retirement funds have exactly two securities in them: A stock index fund and a bond index fund.
sideshowb 5y ago
You could add the option of federal bonds then
officeplant 5y ago
If they're 75 they should focus on retirement.
- googlryas 5y ago
  Or - run for President!
- skohan 5y ago
  Yes frankly a lot of the US' problems are probably related to the fact that it's governed by people who won't be living there in 20 years
DavidPeiffer 5y ago
Index funds aren't necessarily 100% stocks. A basic target date fund will taper down the stock percentage as you get closer to the targeted retirement date, not to mention the myriad of dedicated bond funds with every focus/tilt you can imagine.
- deleted 5y ago
  [deleted]

mywittyname 5y ago

Hi Senator, congratulations on the election results! I'm u/mywittyname with Beutsche Dank I run an index fund for senators. How it works is, you give me a call anytime you hear about an opportunity and my team of crack investors will look into it, making the trade if we feel it is a good fit. We currently have 200 congresspeople on board and have been beating the S&P500 benchmark by 500% annually. It's a $1,000,000 minimum, but we can line up financing if you can't swing that just yet.

bern4444 5y ago
Even better, our fund is indexed against the positions of members of congress. Members can paper trade and we index against their decisions.
nightski 5y ago
Index funds are typically passively managed unlike mutual funds. I'm not saying what you are suggesting is impossible, but generally it would go against the definition of an index fund.
- mywittyname 5y ago
  Index funds allow for options to be traded using the underlying holdings. This is one of the ways a specific index fund can outperform (or underperform) the index. Trading options on sure things can easily generate >10,000% returns in a matter of days if the swing is large enough. All it takes is a few of these sure things a year to generate staggering returns. Imagine what you could do with $100,000 in options contracts if you knew about the next Lehman Brothers collapse. That particular event turned a $0.01 option into $50-75, the on the flip side, the manager could offer OTM puts on existing holdings that would practically nullify any loses. Granted, you don't get a LB-level event every year, but there's always a few pretty good ones each year.
N0tAThr0wAway 5y ago
Index/bond funds are openly (all the holdings are open to public inspection) and passively managed. What you're describing is a mutual fund.

dragonwriter 5y ago

> Someone once told me that a stipulation for public service should involve converting all your holdings into index funds only. For most elected officials (that have broad scope of potential jurisdiction and thus are almost impossible to avoid conflicts of interests), blind trusts are probably even better. For most public servants, even those that have decision-making authority that could potentially raise conflict interests, disclosure and recusal rules are probably all that is needed (and, actually, lots of public servants have no decision–making authority that is likely to even require that.) Appellate and Supreme Court judges could arguably fit in either category; trial court judges seem squarely in the second.

N0tAThr0wAway 5y ago
>For most elected officials (that have broad scope of potential jurisdiction and thus are almost impossible to avoid conflicts of interests), blind trusts are probably even better. Most elected officials (almost all federally) already employ blind trusts. >For most public servants, even those that have decision-making authority that could potentially raise conflict interests, disclosure and recusal rules are probably all that is needed (and, actually, lots of public servants have no decision–making authority that is likely to even require that.) True there are many levels and for lower level (comptrollers and such) that is probably fine. For senators, representatives, judges, etc. the index/bond fund would be even better than the blind trust, since these index funds are publicly inspectable, passively managed, and anyone can buy them.

renewiltord 5y ago

Just make them have to declare at buy/sell time. That will allow instant information transmittal through the market.