Janet Cowell, the State Treasurer of North Carolina has asked the state legislature for the authority to squander more of North Carolina Retirement System's Pension Fund money on so-called "Alternative Investments." Cowell doesn't want just a little leeway, but wants to place a whooping 40% of the $80 Billion pension fund into these "Alternative Investments" or roughly $32 Billion (yes, that's Billion - with a capital B).
Cowell's request reminds me of the fry cook who delivers your food and says, "I burnt your fries, so I gave you a few extra." There is nothing worse than bad food - except, more of it. Like a bad fry cook, Cowell wants to give North Carolina more of a bad investment. And, our state legislature appears willing to give Cowell what she wants. The proposal passed in the Senate yesterday, so it is up to the House to stop the insanity.
"Alternative Investments" are essentially anything other than publicly traded stocks and bonds. This includes real estate, private equity, hedge funds, and commodities just to name a few. Alternative Investments tend to under-perform traditional stocks and bonds because the investment expenses are outrageously high (this is why Wall Street is so good at selling this trash).
Take a look at the 10-year returns the various asset classes have earned within the North Carolina Pension Fund and you will easily see
