Public Pension Assets Increase More Than $257 Billion

Public Pension Assets Increase More Than $257 Billion for State and Local Public-Employee Retirement Systems in 2010

All American Investor

The nation’s state and local public-employee retirement systems had $2.7 trillion in total cash and investment holdings in 2010, a $257.2 billion or 10.6 percent increase from $2.4 trillion in 2009, according to new statistics from the U.S. Census Bureau.

This follows a $722.2 billion loss the previous year.

These statistics come from the 2010 Annual Survey of Public-Employee Retirement Systems, which provides an annual look at the financial activity and membership information of the nation’s state and local public-employee retirement systems, including revenues, expenditures, investment holdings, and number of retirement systems and beneficiaries

@AllAmerInvest Global Recession, Retirement Havens, Google Down Ten Percent, Malcolm X

Shilling says new global recession is here

And here’s the really bad news: He thinks Europe will experience a recession as deep as ours was from 2007-2009 — enough to tip the U.S.’s relatively better economy into recession, too, during the first quarter of 2012.
Read More

Google
Shares fell as much as 10 percent in extended trading yesterday after Google reported fourth-quarter sales, excluding revenue passed on to partner sites, of $8.13 billion, falling short of the $8.41 billion average estimate of analysts surveyed by Bloomberg. Profit before certain costs was $9.50 a share, missing the $10.50 average estimate.

All American Investor

The Trillion Dollar Gap: Underfunded State Retirement Systems

$1 trillion. That’s the gap at the end of fiscal year 2008 between the $2.35 trillion states had set aside to pay for employees’ retirement benefits and the $3.35 trillion price tag of those promises.

Why does it matter? Because every dollar spent to reduce the unfunded retirement liability cannot be used for education, public safety and other needs. Ultimately, taxpayers could face higher
taxes or cuts in essential public services.

Why Dividends are Important—Part III

By Steve Cook.

Steve Cook has 36 years experience in trading and analyzing both fixed income and equity securities, as well as in private placements of debt and equity. CJS Research is currently offering a 30 day free trial of their Dividend Strategy Product.

Why Dividends are Important—Part III

Quick, what’s a stock worth?

Answer: the discounted value of future cash flow. Not book value, not a new technology, not a hundred and one of other factors that you can name.

Sure all those factors may bear on a stock’s dividend or the price for which a stock is ultimately sold. But the only way we as investors get paid a return for the money we invest in a stock is to either have that money returned to us as dividends, or to sell that stock at a price higher than we bought it. Everything thing else is just a bunch of numbers on a piece a paper. You can’t eat them or spend them.

Now think about the decision making process that the companies in whose stock you are investing go through when they make an investment decision. The rate of return on a project is equal to the discounted value of future cash flow--what the project will be ‘worth’ in ten years is irrelevant.

For the company

• it is when do we get our cash back,
  
• how much do we get back
  
• and what is the probability of both?

In these calculations, the quicker the return and the higher the probability of the return, the more the cash flow is worth.

So why should you or I analyze our investments any differently? Why should the future market value of a project (price of a stock) matter more to us than it does to the guys who are running it? And why should the future value of a project (price of a stock) matter more than the current return on that project?

A simple way of thinking about this is as follows: Suppose that you just bought Coca Cola today and I offer you three opportunities to increase your investment return on Coke, pick one.

1.  if Coke pays a dividend on its next scheduled payment date, I will give you a $500 bonus,
   
2.  if Coke pays a dividend equal to or greater than its last dividend payment, I will give you a $1,000 bonus 
3.  if the price of Coke’s stock on its next ex dividend date is higher than it is today. I will give you $1,500.

Which one would you take? If you didn’t chose (2) stop reading, take the dividend you earned from Coke and go buy a Playboy.

The point is that of the two sources of potential return on your investment, (1) dividends a lot more likely to occur on a short term basis than capital gains (2) they are an immediate return on money that you can either re-invest or spend--its Your Money and your choice and (3) a rising stream of cash flow is worth a lot more to you [and corporate management] today than what the project [stock] generating that cash flow might be worth five years from now.


News on Stocks in Our Portfolios

3M (Dividend Growth Portfolio) reported first quarter earnings per share of $.81 versus expectations of $.86 and $1.38 reported in its comparable 2008 quarter.

Subscribe to All American Investor via Email