Gambling for Salvation: Why PBGC Should Just Say “No”

The Pension Benefit Guaranty Corporation (PBGC) has just announced its intention to double its investment in equities to 45 percent of its $67 billion portfolio.  This decision flies in the face of responsible financial management, which in this case calls for avoiding equities entirely, or even better, taking a short position in the stock market.

PBGC’s decision to gamble for solvency is such a bad idea, and is motivated by such perverse institutional incentives, that I’d like to commemorate it by making it the topic of this first blog entry.