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Andreessen Pulls a Bezos

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Re: Andreessen Pulls a Bezos

#41

Post by lotsofpulp »

Spooky23 wrote: post #31
lumost wrote: post #7

Earlier quoted context omitted.

Where does a legal obligation to make 8% a year come from?

Usually pension funds target 6-8% returns. Some state systems are required by law to remain solvent, and are empower to enforce that. For example, New York requires municipalities and other entities to make payments to cover lower returns within a year or two by law. Other states, like most infamously Illinois, have no such requirement and their systems are essentially insolvent, barring the Federal government bailin…

Taxpayer funded defined benefit pension funds assume 6% to 8% returns. Non taxpayer funded defined benefit pension funds are required to use high grade corporate bond yield curves, in the 3% to 4% range. Roughly 1% change in the assumption of return on assets results in 15% of change in liabilities.

NY is an outlier in terms of its defined benefit pension governance, but the way most taxpayer funded pensions currently work, they are vehicles for pushing 30%+ of today’s defined benefit costs onto future taxpayers.

Re: Andreessen Pulls a Bezos

#42

Post by spoonjim »

lotsofpulp wrote: post #41
Spooky23 wrote: post #31

Earlier quoted context omitted.

Usually pension funds target 6-8% returns. Some state systems are required by law to remain solvent, and are empower to enforce that. For example, New York requires municipalities and other entities to make payments to cover lower returns within a year or two by law. Other states, like most infamously Illinois, have no such requirement and their systems are essentially insolvent, barring the Federal government bailin…

Taxpayer funded defined benefit pension funds assume 6% to 8% returns. Non taxpayer funded defined benefit pension funds are required to use high grade corporate bond yield curves, in the 3% to 4% range. Roughly 1% change in the assumption of return on assets results in 15% of change in liabilities. NY is an outlier in terms of its defined benefit pension governance, but the way most taxpayer funded pensions currentl…

at some point the Fed will just decide to inflate those pensions down to half or a third of the real value

Re: Andreessen Pulls a Bezos

#43

Post by lumost »

spoonjim wrote: post #42
lotsofpulp wrote: post #41

Earlier quoted context omitted.

Taxpayer funded defined benefit pension funds assume 6% to 8% returns. Non taxpayer funded defined benefit pension funds are required to use high grade corporate bond yield curves, in the 3% to 4% range. Roughly 1% change in the assumption of return on assets results in 15% of change in liabilities. NY is an outlier in terms of its defined benefit pension governance, but the way most taxpayer funded pensions currentl…

at some point the Fed will just decide to inflate those pensions down to half or a third of the real value

This is really what it will come down to. Real interest rates are falling to 0. The fed can prop the markets up to guarantee any paper return or simply let pensions etc go bust.

At some point the economy will need to rebalance assets in order for interest rates to rise, but there is no preordained condition that requires this to occur.

Re: Andreessen Pulls a Bezos

#44

Post by lotsofpulp »

lumost wrote: post #43
spoonjim wrote: post #42

Earlier quoted context omitted.

at some point the Fed will just decide to inflate those pensions down to half or a third of the real value

This is really what it will come down to. Real interest rates are falling to 0. The fed can prop the markets up to guarantee any paper return or simply let pensions etc go bust. At some point the economy will need to rebalance assets in order for interest rates to rise, but there is no preordained condition that requires this to occur.

Yes, which is why I say VOO/VTI are the real TIPS (treasury inflation protected securities).

Re: Andreessen Pulls a Bezos

#45

Post by seibelj »

lotsofpulp wrote: post #40
seibelj wrote: post #25

Earlier quoted context omitted.

You act as if reducing the rate of return is a simple maneuver. This is politically fraught as it automatically requires employees to contribute more money. Here is an article from today about drama in Illinois, the state with the worst funded pensions in America. Tax payers are legally obligated to back these https://www.illinoispolicy.org/chicago-park-district-reform-...

It is relatively simple, as in no laws need to be passed or anything. The pension board could decide to match the PPA 2006 standards the government requires for non taxpayer funded DB pensions anytime it wants. They will not though, since that would increase their own taxes, and of course start a political firestorm.

You are unbelievably pedantic. You disagree with your opening statement then agree that I’m right!

Re: Andreessen Pulls a Bezos

#46

Post by lotsofpulp »

seibelj wrote: post #45
lotsofpulp wrote: post #40

Earlier quoted context omitted.

It is relatively simple, as in no laws need to be passed or anything. The pension board could decide to match the PPA 2006 standards the government requires for non taxpayer funded DB pensions anytime it wants. They will not though, since that would increase their own taxes, and of course start a political firestorm.

You are unbelievably pedantic. You disagree with your opening statement then agree that I’m right!

I disagree in classifying it as a legal mandate, because that makes it seem like there is some type of law forcing pension fund boards to invest in risky assets. I am not aware of any state law that says the pension fund has to use excessively high return on investment assumptions. State law might say that taxpayers have to prioritize defined benefit pension benefits in the event the pension fund run out.

Ironically, the only law about return on investment assumptions is on non taxpayer funded pension plans via ERISA and PPA 2006. I cannot help but think the only reason taxpayer funded pensions have different rules is so future taxpayers can be fleeced.

The distinction is important, because the reason the pension fund boards invest in risky assets is not due to the law (aka legal mandate), but rather today’s taxpayers wanting to push today’s labor costs onto future taxpayers while not stating it on official reports so that the responsible actors can maintain plausible deniability.

Re: Andreessen Pulls a Bezos

#48

Post by gkop »

rkk3 wrote: post #37
gkop wrote: post #33

Earlier quoted context omitted.

I haven’t worked with A16z, but will say in the case of First Round Capital, their services are truly amazing, and would be material to me in considering term sheets, or even in choosing an early stage start up to join. So I think the capital + services model can be legit.

What service/s specifically impressed you?

- The in-person programming: speakers, seminars, support groups, fun events, CEO and CTO conferences

- First Round Network Q&A site

- Structured mentorship program

- In house recruiters and job board (yes this is table stakes, but FRC did a great job here)

I also really liked the people I worked with from FRC and their whole vibe, but that’s another subject.

Re: Andreessen Pulls a Bezos

#49

Post by ksec »

>Venture capital investors are big fans of the word "strategy,"

(.....) Deleted a thousand word rant that are against rules on HN and continued intensely fouled language.

They were the ones who said strategy is useless, execution eats strategy for breakfast.

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