Tuesday, March 17, 2009

Bear Markets and Local Governments

There are many non-Wall Street institutions in our country that invest into the stock market. There are billions of dollars invested by schools, hospitals, municipal utility authorities, local and state governments.

It seems to me that most of these institutions invest their monies poorly and have really learned nothing from the current bear market. On the one hand, their poor investment performance is understandable - many of the people making the decisions have no real background in the investment industry.

On the other hand, it is inexcusable - the decision-makers should take the time to go out and find unbiased, knowleadable sources that they can rely on to help them make prudent investment decisions.

If decision-makers do not do this, they pay the price. The local Pittsburgh Water Authority was basically "conned" by JP Morgan into getting involved with an interest rate swap. This will cost the Water Authority tens of millions of dollars that they do not have.

Yet, all the decision-makers at the Pittsburgh Water Authority had to was to contact a local unbiased, knowledgable professional (like myself). I would have told them - "Are you nuts? Tell those snake-oil salesmen from JP Morgan to find suckers elsewhere".

Yet none of the decision-makers in any of these type of institutions do that. I offered my services free of charge to my local municipality. I presented my credentials (over 20 years in the business,etc.) to the local decision-makers.

Their answer - but you don't work currently for any financial institutional. That's the whole idea! I would give an unbiased opinion - I have nothing to sell!

Until these governmental and quasi-governmental institutions start getting their investment advice from someone other than Wall Street snake-oil salesmen, their portfolios of PUBLIC money will continue to go down and down.

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