There was an article that I ran across yesterday which should be of interest to most of us. The article is about who is running pension money now – in the ‘olden days’ it was major insurance companies (or the companies themselves) – now more and more it is private equity running the money.
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5/6/2024
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Private Equity is going to be looking for new ways to make money now that they will be exiting the nursing home business with the new staffing regulations.
That was one of their “innovations” was to reduce staffing by use of a badly designed software tool.
Interesting. Something tells me this may not turn out for the best in the long term. We all know with higher returns comes greater risk. I’ve gotten burned a couple of times when I got greedy. FYI…… Since I have no pensions at all due to being self employed I have no dog in this fight to worry about.
“In the last 30 years, there hasn’t been a single [retiree] under a group annuity contract that’s missed a payment or had a benefit cut,” said Preston Rutledge, a former assistant Labor secretary for employee benefits.“
I think many of the closed end funds are insurance owed, so are they as good or better at risk management? Time will tell?
Payday, unease is that element of greed. The 2 questions are when the next event is coming and where it is coming from.
It’s never the same thing twice.
Remember I said I watched the Big Short the other night. Two things stood out. Every expert saying that the mortgages and the bond market had never had a failure and the president of Lehman Brothers saying his company wasn’t in trouble.
Today you have PE buying insurance companies and taking retirement money and investing it and packaging quality investments with high risk ones. You also have different divisions of private equity owning parts of their sister companies as investments. I am beginning to wonder if it’s time to be very scared. Lots of insurance companies that have been around over a hundred years and survived all major events and people saying they have never failed. Kinda like that movie.
I get it…I am surprised none of the big insurance companies and CFE’s did not go under . Time will tell during the next big under…
Payday, I thought about it and the babies getting thrown out with the bathwater came to mind. I don’t short, for one thing the market can be more irrational than you have money to keep shorting, but the AAA insurance companies that are not controlled by PE are going to dump along with the rest leaving the opportunity to buy them at discount. Identify them now and follow them over the next few years. There’s bad CRE debt coming up and the money keeps flowing into the retirement funds that have to be put somewhere then these BDC’ s and PE add leverage on top to juice the return.😳