Your Survival Guy

Preparing your investments and family for when disaster strikes.

Disclosure

  • Home
  • Your Survival
    • Your Survival Guy’s Super States
    • EMP Threat
    • Tucker Explains
    • Newport Gas Outage
    • Water
      • Emergency Water Storage
      • Let There Be Water
    • Get Your Gun and Your Training Now
    • Satellite Phones
    • Navy SEAL Survival Kit
  • Your Money
    • Coronavirus Infects Stock Market
    • Looking for a Better America
    • You Invest, They Win
    • Where to Keep Your Cash
    • Paris
    • How to Buy a Boat
    • Dead or Alive? The Future of Long-Term Investing
    • Is Vanguard too Big?
    • Cryptocosm and Life After Google
    • The Last Intelligence Report
    • The Truth Behind the S&P 500
    • RAGE Gauge
    • How Many “Retirees” Will Keep Working?
    • Your Retirement Life
    • You’ll Love This if You’re Dreaming of an Active Retirement Life
  • Weapons
    • Self Defense
    • Every Family Should Own at Least One Shotgun: Here Are Three
  • About Me
    • Your Survival Guy: “Life on Main Street Hasn’t Been This Hard in a While”
    • Preparing for Times Like These
    • My Videos/Pics
    • Music
      • RIP Neil Peart: You Will Always Be Remembered as a “Modern-Day Warrior”
    • Your Survival Guy: Make Your Bed and The Hero Code
  • You
    • Our Cabin on Kodiak, Alaska
    • If You Are in Pain, this May Help. It Helped Me.
    • How to Save for a Grandchild
    • FIRE! Financial Independence, Retire Early
    • Compound Interest
    • Arithmetic of Portfolio Losses
    • Maximum Portfolio Withdrawal Rate
    • An Efficient Frontier
    • Retirement Compounders
    • Counterbalanced Total Returns
  • Survive & Thrive
    • July 2022
    • June 2022
    • May 2022
    • April 2022
    • March 2022
    • February 2022
    • January 2022
    • December 2021
    • November 2021
    • October 2021
    • September 2021
    • August 2021
    • July 2021
    • June 2021
    • May 2021
    • April 2021
    • March 2021
    • February 2021
    • January 2021
    • December 2020
    • November 2020
    • October 2020
    • September 2020
    • August 2020
    • July 2020
    • June 2020
    • May 2020
    • April 2020
    • March 2020
    • February 2020
    • January 2020
    • December 2019
    • November 2019
    • October 2019
    • September 2019
    • August 2019
    • July 2019
    • June 2019
    • May 2019
    • April 2019
    • March 2019
    • February 2019
    • January 2019
    • December 2018
    • November 2018
    • October 2018
    • September 2018
    • August 2018
    • July 2018
    • June 2018
    • May 2018
    • April 2018
    • March 2018
    • February 2018
    • Welcome

Can Private Equity Really Save Sinking Pension Funds?

March 25, 2019 By E.J. Smith - Your Survival Guy

By Zwiebackesser @ Shutterstock.com

In The Wall Street Journal, Jason Zweig tells the story of Calpers, the nation’s largest pension fund, and the nation’s growing investments in private equity. Like Calpers, many pensions are hoping to meet unrealistic return expectations (something I have written about many times, including here, here, here, and here) by investing in private equity. The problem is, it isn’t a sure bet that private equity will be able to produce the returns necessary. Zweig writes:

Still, the future for private equity might not be as lucrative as the past, with money gushing in and with buyouts priced near their highest levels in the past decade and a half.

“Now, when everyone else is doing it and with [the prices of buyout deals] higher, expected returns look just okay,” says Steven Kaplan, a finance professor at the University of Chicago Booth School of Business.

Proponents say private equity’s outperformance comes from skilled managers who buy companies at attractive prices, improve operations, crank up returns with borrowed money and then sell at even more attractive prices.

Skeptics say the outperformance comes from using debt to invest in companies that are somewhat smaller and cheaper than average—which you could do yourself, at a fraction of the cost, by using borrowed money to buy an exchange-traded fund.

In a blog post last September, investment advisers Preston McSwain, managing partner of Fiduciary Wealth Partners in Boston, and Wesley Gray, founder of Alpha Architect in Broomall, Pa., posted a wager.

They offered to bet up to $1,000 that, over the next 15 years, a basket of the 10 largest private-equity funds of 2018 won’t outperform the stone-simple, dirt-cheap Vanguard Extended Market exchange-traded fund (purchased with 50% borrowed money).

So far, no takers.

Read more here.

The following two tabs change content below.
  • Bio
  • Latest Posts
My Twitter profileMy Facebook profileMy Instagram profile

E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com
My Twitter profileMy Facebook profileMy Instagram profile

Latest posts by E.J. Smith - Your Survival Guy (see all)

  • Happy Independence Day! - July 4, 2022
  • WATCH: New York Governor Melts Down When Asked for Facts - July 1, 2022
  • Even Without Food and Gas, Inflation is Soaring - July 1, 2022
  • Survive and Thrive July 2022: MONEY TALKS: Your Survival Guy’s Best Service in Paris - July 1, 2022
  • Time to Save, Troubles Dining Out, and Intelligence on Yellowstone - June 30, 2022

If you enjoyed this post, email it to a friend:

  • Email
  • Print
  • Facebook
  • LinkedIn
  • Twitter
  • WhatsApp

Related Posts

Money 101

Trending

  • This State Leads America in Gun Ownership
  • Time to Save, Troubles Dining Out, and Intelligence on Yellowstone
  • Proper School Security Stops Potential Attacker
  • Your Survival Guy: Clearing the Decks, Buying a Boat, Seeing the World and More
  • Here’s Why You Need a 15-Year Retirement Investment Plan
  • WATCH: New York Governor Melts Down When Asked for Facts
  • More Guns Means Less Crime in Brazil Too
  • SECRETLY INSOLVENT: Crypto Exchanges Hiding Their Troubles
  • Republicans Can't Stop Biden's Border Chaos, Yet
  • How to Buy a Boat: Part I

Must Reads

  • Why You Can’t Afford to Miss the Boat
  • Investment Advice: Sticking with the Four-Year-Olds
  • Americans Fleeing High Tax States for Growth Corridors
  • HELLO: “How’s It Going? I Don’t Know Anything”
  • Parents Are the New Tea Party. Bad Schools Are the New High Taxes.
  • BIDEN-FLATION: Here’s Why Prices Are Up At Your Favorite Restaurant
  • Your Survival Guy: Emerging Food and Energy Crisis
  • Your Survival Guy’s 2022 Super States: #1 New Hampshire
  • Your Job as an Investor Is Not What You Think
  • GET PAID: How To Invest in Biden’s Inflationary Market
Only if You’re Serious
Your Survival Guy in Paris
Your Survival Guy's Fishing Stories
Financial Independence, Retire Early
Money 101
Pandemic Creates Virtual Panopticon
Emergency Water Storage
Key West Summer Camp in March
Find Freedom in America
Second Amendment
How Can You Save Money for Your Grandchild
Great Reset
See Who's Missing the Boat
Richard  Young Reports
How You Can Save Money for Your Grandchild
Why Fidelity is Number One
The Best States for Survival
You Invest, They Win
Escape the City
Why Vanguard is Too Big for YOU
Island Life

Copyright © 2022 | Terms & Conditions

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.