newjerseynewsroom.com

BY PAM LOBLEY

NEWJERSEYNEWSROOM.COM

NOW THAT’S FUNNY

Everybody into the pool! The pension pool, that is.

New Jersey pension funds may now invest up to 38% of their monies in “alternative investments.” These could include real estate, commodities, hedge funds and private equity. This is an increase from the previous cap of 28%, and the current amount of these investments stands at 17%. The State Investment Council is looking at ways to increase the return on their investments because the fund needs money. It has been raided for years by politicians desperately trying to balance a budget or keep campaign promises. Since nobody is planning on paying back the fund, the Council is hoping to increase its rate of returns.

So, what do you do when you’re down to your last ten dollars? You bet five of it on the ponies, double or nothing! Right?

Proponents of alternative investments say they offer a good counterbalance to the volatility of the stock market. Alternative investments can do well in a down market, so as to offset losses incurred when the S&P is sagging. However, private equity is notoriously non-liquid, which could be a problem for a pension fund that needs to make regular payouts. Hedge funds are largely unregulated and often impossible to decipher so that the investor is not really sure what types of risks he is taking. In addition, managers of hedge funds charge a lot. In 2010, New Jersey’s pensions paid $127 million in fees and expenses, much of it to managers of alternative investments.

Yet the alternative investment portfolios have shown mixed results. They were down 10% at the end of 2010, but they are up 9.5% for the first quarter this year.

Look, there are lots of ways to make money. As long as we’re opening up the fund to “alternatives”, here are some ideas.

Zip on down to the Meadowlands and enjoy some lucrative harness race betting.

Get Governor Christie to take the fund to Vegas and put it all on black. While there, have Robert Redford offer him $1 million to sleep with his wife.

Get Cory Booker to go on Celebrity Poker and win big.

Government workers can take turns going on “Minute to Win It” and pool their earnings.

Organize the top professors in the state and get them to compete on “Jeopardy”.

Make some loans to some guys, if you know what I mean. The interest rate is huge, and they WILL pay it back.

Buy some real estate and flip it. What could go wrong there?

Have all the recently laid off policemen in Newark take dance lessons and star in a show in which they close the evening by stripping down to “the full monty”.

Start a coin drop outside the courthouse in Trenton.

Bundle some lousy mortgages into a credit default swap and sell it to unsuspecting investors as a Triple A bond. I hear this works great.