Tuesday, September 23, 2014

The RI Democratic Unity Hoax

      Democratic Hypocrisy in Rhode Island is oozing even beyond its normal level.Debbie Wasserman Schultz now joins  in this  cynical effort to display a real unified policy front  in the corrupt state of  Rhode Island with its seriously flawed individual leaders. For example ,on the issue of Social Security and pensions Democrats are massively confused and conflicted,   Senators Sheldon Whitehouse and Jack Reed as well as Congressman David Cicilline and Jim Langevin  have expressed forcefully  on repeated occasions that  efforts to privatize or even  partially privatize Social Security are "risky". At  at the same time. as residents and supporters of people like Angel Taveras and Joe Polisena they have hugely underfunded local pensions. Stocks are the huge favorite by Democratic mayors on how to fund these retirement plans. Are the mayor being to risky ? Why aren't the Senators or Congressmen  speaking out? Dont they care about local retirements or public workers? Are they critical of Angel Taveras huge investment in a single leveraged hedge Fund?Unquestionably Taveras et al  have put  taxpayers and beneficiaries at risk of enormous losses due to hedge fund and private Equity investments. David Cicilline and Angel Taveras who are  both stalwart democrats   have invested huge in the same hedge funds  on behalf of public employees and taxpayers even while they knew their  pension plans were already at enormous risk and taxpayers would have to bail them out. How does that square with the idea that stocks are too risky for social security? Obviously, it does not square. No wonder 10% of the public believes in Washington. So lets look at our elected officials  comments and what they have done or said re pensions and stock investments.
   The  typical comment  Democratic position  on equity investment by  Social Security  or individuals investing with SS money is as follows:

                Privatizing Social Security, which essentially is putting peoples' retirement money at the whim of the stock market, will weaken the federal retirement system through potentially risky investments.
Both Whitehouse  and Reed have made similar comments

Debbie Wasserman Schulttz  clearly aligns with the near universal democratic position on  whether stocks or corporate bonds should be held by Social Security.   here is a comment during the recent presidential campaign;

“ Paul Ryan still pushes through his budget that ends Medicare as we know it,  -- he  moves toward privatizing Social Security, he asks for cuts education and increases taxes on the middle class, so that we can -- so that we can cut taxes for the wealthiest, most fortunate Americans,” Wasserman Schultz said. “That's why Americans are concerned that we're not going to actually be able to maintain the prosperity that we've finally returned to.

 Sheldon Whitehouseon Investing in stocks with retirement dollars

Q: Will you support or oppose using Social Security taxes to fund private accounts?
A: Social Security has been the foundation of our country’s promise that no American will have to face an impoverished retirement. The Republican leadership in Washington is committed to undermining this promise through a risky scheme to put Social Security funds in the stock market as part of new private accounts. We should never again put seniors’ livelihoods at risk from a catastrophic stock market crash. I am opposed to President Bush’s proposal to cut Social Security benefits to middle-income workers through progressive indexing, and am disappointed that Senator Chafee has expressed support for this plan.
Source: AARP Senate candidate questionnaire , Sep 29, 2006 
 So Mr Whitehouse thinks stocks are a risky scheme for SS participants but for Rhode island  State and Municipal Workers who do not pay into social security instead into local  plans not only are stocks fine, but Rhode Island retirees should be exposed to hedge fund investments by Cicilline, taveras  and Raimondo.  Why are stocks risky for social security and not for municipal or state employees?
Jack Reed
 "As we celebrate the great success of Social Security, we must also recognize that it does face a long term financial challenge. I will work with my colleagues to strengthen Social Security, not to dismantle it through a risky privatization scheme. Deep benefit cuts and trillions in new debt is no way to honor the great legacy of President Roosevelt and Francis Perkins."

 Again  Mr Reed supports the  governmental   policies of  Gina Raimondo and  David Cicilline and Angel Taveras. Yet they all had significant investments in hedge funds, equities and alternative investments using retirement money. There are no concerns  expressed by leading democrats about the retirements of State and Municipal portfolios.Are they too dumb to know they are walking hypocrites?

    Calpers recently announced ,to the delight of many dems and unions, the shedding of Hedge fund investments. My question is why did they do that and whats appropriate? How can Dems believe its appropriate to back social security with investments in only US  30 year bonds at 3% and then not have any qualms at all about the very risky portfolios for retirement managed at the State and Municipal level?  Where are the progressives on this? Should we invest retirement funds in stocks and hedge funds based on  mayor Taveras "feel"?  What is an appropriate investment for cities and towns retirees and why is it  different from Social Security?. In both cases the taxpayer would pay for shortfalls. Why not risk free instruments for states and munis?Why does  David Cicilline put a big bet on hedge fund Renaissance Technologies for Providence retired Police and Fire and then say in Congress that  stocks are inappropriate for social security. What exactly are the dems saying?

Monday, September 1, 2014

Waiting for CFA ruling against Trillium and Magaziner

 I have filed an official complaint with the CFA institute re: Seth Magaziner, Trillium Asset Management and CEO Matthew Patsky. It is now under review and I don’t know when I will hear a response. Generally it takes 5 business days.
 As I outlined in detail previously http://rishrugs.blogspot.com/2014/07/ri-treasury-candidate-seth-magaziners.html , Rhode Island candidate for Treasurer Seth Magaziner  has openly violated several tenets and aspects of the CFA code of Asset Management. Shortly thereafter Trillium Asset Management ,where Magaziner currently works and  who had already violated CFA supervision rules, piled on with CEO Matthew Patsky publicly endorsing Magaziners  misrepresentations.

July 2014 Seth Magaziner
.."at the same time I have made strong investment returns for my clients. I look forward to doing the same for the State when I am treasurer"
"My record as an investment professional is unmatched in this race .I have taken on the responsibility of managing funds for church groups and non profits and retirees. And I have delivered . I look forward to doing the same thing for this state"
”The most important thing we can do to bring “colas” back to the workers and strengthen the pension system  is to make strong investment returns and My track record as an investor is  second  to none in this race.”

Here is a summary what  Magaziner and Trillium violated.

1) Seth is a research analyst not a money manager or portfolio manager nor has ever managed money professionally.

2) Seth has zero Investment professional accreditation or licenses (series 65,66.7,CFP,CFA,ChFC etc)

3) Seth has no track record. His firm does and his team might but he does not.

4) Seth mislead about the performance of his firm in addition to making up his own performance.

5) Seth repeatedly makes investment claims to the public for which he has no evidence. Almost all money managers and portfolio managers have specific track records. Seth is a research analyst perhaps that’s why there is no record. That being the case these statement are known as lies  and that’s not a good sign for Treasurer but probably a great sign for a long political career in Rhode Island.
The following is just one part of the code Trillium and Seth Magaziner are governed by and it could not be more clear.

Asset Manager Code
E.1 performance presentation
   Managers have a duty to present performance information that is a fair representation of their record and includesall relevant factors.

 In particular, Managers should be certain not to misrepresent their track records by taking credit for performance that is not their own (i.e., when they were not managing a particular portfolio or product) or by selectively presenting certain time periods or investments (i.e., cherry picking).

For those who care about integrity and investment performance standards I have provide the following links:

Ethics and Standards - Standard III-D: Performance Presentation
When communicating investment performance information, Members or Candidates must make reasonable efforts to ensure the information is fair, accurate and complete.

Reasoning behind Standard III-D
This Standard applies the guiding ethical principles of fair representation and full disclosure to the measurement and presentation of investment performance information. Much of the negative stigma associated with the money management business has to do with the marketing of performance returns in an effort to capture attention (e.g. "We returned 46% last year, and the market only did 11%! Sign up with us!"). Prospective clients and the investing public at large don't know what to think. Are these numbers a fair indication of what they can legitimately expect or a sleight-of-hand magic trick that may or may not be a total fabrication?

E. Performance and Valuation

1.   Managers must:  Present performance information that is fair, accurate, relevant, timely, and
complete. Managers must not misrepresent the performance of individual
portfolios or of their firm. Although past performance is not necessarily indicative of future performance, historical performance records are often used by prospective clients as part of the evaluation process when hiring asset managers. Managers have a duty to present performance information that is a fair representation of their record and includes
all relevant factors.

 In particular, Managers should be certain not to misrepresent their track records by taking credit for performance that is not their own (i.e., when they were not managing a particular portfolio or product) or by selectively presenting certain time periods or investments (i.e., cherry picking). Any hypothetical or backtested performance must be clearly identified as such. Managers should provide as much additional portfolio transparency as feasibly possible. Any forward-looking information provided to clients must also be fair, accurate, and complete.