Bad Pensions

I was talking to a friend earlier.

Yes. I have friends.

He's a pension fund analyst.

I asked him point blank: What's the state of our pensions?

"It's a fucking disaster. If you saw who sat on the board who make the decisions..."

"That bad, huh?"

"There are exceptions. CN (Canadian National) has an outstanding pension plan; well run. Bombardier on the other hand is a total fucking joke. During the .com bubble they bought all sorts of shit. Then, poof. No big deal. They then cry to the government and get bailed out. They can't compete period."

"That company should have gone under 20 years ago."

"No kidding. It's been propped up."

*I remember when I was a stock broker I'd listen in on conference calls with European and American stock analysts and they never quite got why people would buy Bombardier. In their eyes, it was a ward of the state and didn't really have an inherent value that supported the stock price/multiple at the time. At one point during the early 2000s Bombardier traded around $35 and even split a couple of times.

"But overall?"

"Overall it's not pretty. We're marginally better than the Americans if only because we're more regulated. But you can't legislate against stupidity."

"Hey, I say that! You stole!"

"I know. Point is, the decisions have been so poor we will pay the price. What don't people get about that? It really isn't complicated."

Indeed. You have one dollar. You invest in something and it goes to .10 cents and then you try and fix that by asking for a subsidy only to reinvest that money poorly. Then a bail out comes.

Do the math. In fact, the math isn't the issue. The problem is the lack of investment knowledge among decision makers.

All we do is enable bad behavior.