State Employees’ Retirement Fund Market Value Altimeter
February 2007
| Valuation Date |
Market Value (in billions) |
| 12/31/06 | $11.311 |
| 11/30/06 | $11.194 |
| 9/30/06 | $10.836 |
| 6/30/06 | $10.494 |
| 3/31/06 | $10.590 |
| 12/31/05 | $10.273 |
| 12/31/04 | $9.785 |
| 12/31/03 | $9.369 |
| 12/31/02 | $8.573 |
| 12/31/01 | $9.914 |
| 12/31/00 | $10.890 |
| 12/31/99 | $11.055 |
| 12/31/98 | $10.020 |
| 12/31/97 | $8.922 |
| 12/31/96 | $7.654 |
| 12/31/94 | $5.385 |
| 12/31/90 | 3.9935 |
The State Employee Retirement Investment portfolio increased 117 million between November 30, 2006 and December 31, 2006, another new high. As indicated on the above chart, the market value climbed to 11.311 billion dollars. The Alternative Investment portion represents approximately 12% of the portfolio and as of November 30, 2006 showed a 7.145 billion figure.
There are presently nine areas including venture capital that make up the Alternative Investment Fund. The workings of these areas to this writer appear complex in nature and unfortunately in the previous issues of the Seranade we treated them as cats and “dogs” an odd expression to say the least. We definitely were “barking up the wrong tree.” After concerted investigation and the receipt of needed help it was disclosed that the Alternative Investment Fund was a viable and definite profitable operation. This is indicated by the cost weighted rates of return for the recent one and three year periods as 28.4% and 23.6% respectively.
In this time of macula the following is a mission statement that indicates the mechanics of the Alternative Investment Division. “The Division manages investments in the nontraditional asset classes of private equity and venture capital through dedicated limited partnerships using a variety of equity and debt instruments. Staff is responsible for establishing and maintaining relationships with private sector investment professionals, evaluating and recommending venture capital, buyout and merger/acquisition investment opportunities as well as portfolio management of these non-publicly treated investments.”
Observations, Facts and Assumptions
We are told that 50% of those individuals in retirement have invested in some kind of a stock program. Because of their age many are not putting their faith in 10 year or long-term stocks. As time is of the essence short term portfolios are best for some of us such as 5-year terms or less. However, overall the long-term stocks have proven to out perform bonds and cash type investments such as money market funds. Studies show that every ten year period since 1926 stocks have outpaced bonds and cash 80% of the time. Any investing particularly in retirement is tricky. You can’t be too conservative and you really can’t afford to be a big loser. We have read — Buy to the sound of cannons; Sell to the sound of trumpets. Translation: Buy when people are pessimistic; sell when they are too optimistic. Don’t forget — Buy low and sell high — pray and don’t hold your breath.
There is a rumble going around again regarding an early out plan for state workers. Actually House Bills 4005 and 4075 are presently under consideration in the Legislature. Advocates for the changes trumpet cost savings that would involve 5,000 workers. Some reports advise that the early out five years ago has still left its stigma. Not having enough of those left behind to work the job. Through the years rumors of 80 and out were being circulated but no legislator has taken the initiative to front such a bill. Under an 80 and out program the pace of those leaving state service would be spread over a 12 month period rather than seeing thousands leaving at the same time.
Did You Know
- Michigan’s economy was hit especially hard during the Depression starting in 1929 because of its reliance on the auto industry. Deja vous.
- Michigan was the nation’s leading lumber production state from 1860 until 1910.
- There were 63 million cubic yards of trash dumped in Michigan landfills in 2005.
- “The Green Hornet” radio show in 1936 originated on Detroit radio station WXYZ and lasted 16 years.
Ponder This
- Bloopers by the then President:
- Solutions are not the answer. Richard Nixon.
- If Lincoln were alive today he’d roll over in his grave. Gerald Ford.
- The current immigration rate is higher than at any time since the 1850s. Over one million every year.
- “Refuse to let an old person move into your body.” Wayne Dyer.
- A person in his eighties once said with a wink “My age is none of my business.”
Commentary
The summary of a SERA proposal to enhance pensions for a specific group of retirees is as follows: The last overall adjustment in state pensions was made in 1987. The legislation SERA is proposing addresses the pensions of only those who have been retired prior to October 1, 1986. Inflation and the continual rise in health care costs has eroded the spending power of this particular retiree group some who are now at or ar approaching the poverty level. This appears an unconscionable circumstance.
Editor’s note: Al Trierweiter is a former President of the Lansing SERA Chapter, former Chairman of the Michigan SERA Coordinating Council, former Legislative Representative for both the Lansing Chapter and the SERA Council. AI may be reached at 6440 Old River Trail, Lansing 48917; phone 321-0041.
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