patrick.net

is it just me or is running a public pension fund just like a plain old 20 billion dollar margin account a bad idea?

perhaps they see the glass half full, where I see the glass @ (50% overall inefficiency)...

what do you see?

for details (what I am thinking about) check out the quote (in the Wall St. Journal article) where the SD county board thinks there is no problem using leverage

"Simply put, it could have a market exposure of $20 billion despite only managing half that amount."

http://online.wsj.com/articles/san-diego-pension-dials-up-the-risk-to-combat-a-shortfall-1407974779

and their press release

http://www.sdcera.org/FTR/SDCERA_long_term_investment_returns_exceed_amount_needed_08112014.pdf

is it just me or am I missing something?

to explain why I think its a bad idea, I googled "buying stocks on margin" and checked out the first search result, where it seem the math is pretty simple to understand (just add "000,000" to the following):

A Buying Power Example
Let's say that you deposit $10,000 in your margin account. Because you put up 50% of the purchase price, this means you have $20,000 worth of buying power.

http://www.investopedia.com/university/margin/margin1.asp

Returning to our example of exaggerated profits, say that instead of rocketing up 25%, our shares fell 25%. Now your investment would be worth $15,000 (200 shares x $75). You sell the stock, pay back your broker the $10,000, and end up with $5,000. That's a 50% loss, plus commissions and interest, which otherwise would have been a loss of only 25%.

Think a 50% loss is bad? It can get much worse. Buying on margin is the only stock-based investment where you stand to lose more money than you invested. A dive of 50% or more will cause you to lose more than 100%, with interest and commissions on top of that.

http://www.investopedia.com/university/margin/margin4.asp