America's pensions can't beat Vanguard but they can close a hospital • Hacker News Board

Re: America's pensions can't beat Vanguard but they can close a hospital

#231

Post by PlatoIsADisease » Tue, Feb 17, 2026, 5:26 PM UTC

Ajedi32 wrote: post #153

nostromo95 wrote: post #101

Earlier quoted context omitted.

Pension funds have a different time horizon / cash flow needs than individual investors (namely, they need to meet their liabilities every month) and so are going to have a more conservative asset mix (read: lower expected returns w/ lower volatility) than your average S&P500 index funds. For example, CaLPERS has ~45% of their assets under management in debt / real estate.

Is high volatility really such a concern when you're dealing with a large pool of funds over such a long timeframe? Sure, if you need to withdraw funds during a downturn that's bad, but over the long term isn't that statistically balanced out by other months where you get lucky and withdraw during a peak?

I dont think its safe to assume perfect balance.

Further, I know it goes against economic orthodoxy, but I am a big fan of buying low and selling high. When the market is bad, I become more frugal, I might even run on debt instead of selling. When the market is at all time highs, I'll sell some from riskier and move that into other things.

Another oddity in this situation... People die slightly more often during flu season, so you could game this and plan to withdraw less.

Re: America's pensions can't beat Vanguard but they can close a hospital

#232

Post by hparadiz » Tue, Feb 17, 2026, 5:26 PM UTC

AlexandrB wrote: post #138

hparadiz wrote: post #114

Earlier quoted context omitted.

Should post grad be funded by the government? Yes. Next question. Feel like I'm answering whether or not public schools should be a thing from some 19th century peasant.

It's a question of supply and demand though. Sure we should fund science post grad, I'm not so sure about humanities (supply already outstrips demand there). Saying we should fund "post grad" in general elides this complexity. Public school is as much about providing babysitters for parents that have to work as it is about education. Notice how hard it is to be expelled from public school. Grades are irrelevant. This…

When compulsory education became a thing it met resistance from families that didn't wanna lose another pair of working hands on the farm. Babysitting is a 20th century post agrarian phenomenon.

Re: America's pensions can't beat Vanguard but they can close a hospital

#233

Post by toomuchtodo » Tue, Feb 17, 2026, 5:27 PM UTC

Ajedi32 wrote: post #69

toomuchtodo wrote: post #43

Earlier quoted context omitted.

Longbets: “Over a ten-year period commencing on January 1, 2008, and ending on December 31, 2017, the S&P 500 will outperform a portfolio of funds of hedge funds, when performance is measured on a basis net of fees, costs and expenses.” - https://longbets.org/362/ (won by Warren Buffett) Should New York’s $270B pension fund abandon Wall Street? - https://www.semafor.com/article/08/07/2025/new-york-comptrol... - Augus…

Yes, that's my point. That bet ended 8 years ago. If "multiplying money" is really the sole goal then why didn't all the pension funds switch to investing in index funds back then? There are clearly some structural issues here which don't align well with the idea that pensions are a "paperclip maximizer" with the goal of maximizing returns. I find it interesting that the OP isn't arguing pensions should switch to inv…

Are you asking why people getting paid to manage pensions inefficiently want to continue to get paid to do so?

Re: America's pensions can't beat Vanguard but they can close a hospital

#234

Post by irishcoffee » Tue, Feb 17, 2026, 5:28 PM UTC

happyopossum wrote: post #155

Someone1234 wrote: post #77

> student loan relief inflationary and unfair The problem with US student loans is usury . Student Loan interest rates in the US can be as high as 9-13%. The government can borrow at 3.36% which even if we assume a 20% overhead is 4.03% to the borrower. Other countries/governments do a scheme similar to this, and it makes repayment realistic . I'm certain someone will respond telling me the difference between Subsidi…

Your argument kinda falls apart with the observation that private loans often have waaaay lower interest rates than federal ones... Typical private loans start in the 3% range, vs 6.4 for the lowest Federal ones.

Federal loans can be discharged after 10 years of public service, private loans cannot. Hence the higher rate. Well, one reason for a higher rate.

Re: America's pensions can't beat Vanguard but they can close a hospital

#235

Post by jahsome » Tue, Feb 17, 2026, 5:28 PM UTC

shermantanktop wrote: post #140

jahsome wrote: post #106

Earlier quoted context omitted.

Do I believe in community, empathy, kindness toward my fellow human beings? Why, yes. Yes I do. Am I willing to pay a few bucks to put my money where my mouth yes. Why yes, yes I am.

The unfortunate reality is that your kindness and empathy is a resource that is being exploited by unseen actors. You are being taken for a ride and you feel good about it. I absolutely support maximizing access to education and I'm willing to pay for it. I'm not willing to prop up a giant unsecured-loan grift that transfers financial risk onto those least able to bear it, while universities jack up their tuition to…

You are correct and I am making a conscious choice. I'm not being taken for a ride, I'm willingly offering one, even to those who would rob me blind given the chance.

Of course there are those who would exploit. But I'm not going to punish the well-deserving masses because of the unscrupulous few. It's a very small sacrifice I can make each year, which has the potential to positively impact the lives of thousands of families, and for generations to come.

Were I to refuse participation in such an opportunity to "protect" myself, I'd be no less selfish and greedy than those you warned me about.

Re: America's pensions can't beat Vanguard but they can close a hospital

#236

Post by epistasis » Tue, Feb 17, 2026, 5:31 PM UTC

steveBK123 wrote: post #173

58028641 wrote: post #95

Earlier quoted context omitted.

There are banks that sweep the money across various other banks automatically.

Things I learned in Econ 101 like 25 years ago, and one of about four options if you google "how do companies manage payroll with fdic limits". But people with [mb]illions of funding just plopped money in a single account ..

Indeed, most of SVBs customers were those who had almost zero business finance experience. There were lots of startups but there were also lots of normal businesses and non-profits in the Bay Area that used SVB.

Perhaps the slow depositors should be punished for not being sufficiently sophisticated, or as quick as the Thiel-backed startups that got the bat-signal to do a bank run. But the "moral" value of letting all those organizations lose their deposits is very low. The moral value of letting SVB fail, which it did, seems high to me!

Re: America's pensions can't beat Vanguard but they can close a hospital

#237

Post by gruez » Tue, Feb 17, 2026, 5:31 PM UTC

LanceH wrote: post #115

Starman_Jones wrote: post #80

Earlier quoted context omitted.

I agree with you about student loan forgiveness, but disagree with your assessment of universities as a system. The humanities (which are highly profitable for the university) are suffering an existential crisis because their funding keeps getting cut, while STEM programs (which have low or even negative ROI after lab/equipment/resource costs) keep getting expanded. There's obviously more nuance to that, but at a hig…

How about clawbacks from the universities.

Seems massively unconstitutional to retroactively impose penalties, especially if the previous behavior didn't violate any laws. Not to mention the reputational risk on the trustworthiness of US as a place to do business and the risk of abuse from future administrations. You might cheer that universities are getting their just desserts for scamming students, but your political adversaries might use it to claw back funding from universities for being too "woke" or whatever.

Re: America's pensions can't beat Vanguard but they can close a hospital

#238

Post by 46493168 » Tue, Feb 17, 2026, 5:32 PM UTC

AnthonyMouse wrote: post #158

cj wrote: post #107

Earlier quoted context omitted.

Allowing student debt to be canceled during bankruptcy would be a good first step (possibly even better than canceling student debt across the board). To your point, making it easy to cancel debt teaches borrowers that debt isn’t a serious thing. Requiring someone go through bankruptcy (and all of the associated negatives on your credit score, etc) seems like a good tradeoff. Allows you to get out from under the debt…

Bankruptcy affects your credit score for 7-10 years. Someone who graduates from college in their early 20s with six figures in debt could file for bankruptcy immediately and have it be off their credit history by the time they've saved up a down payment and want to get a mortgage. There is also the obvious drawback that if more people can discharge the debt, the interest rate goes up, and then everyone else has to pa…

> Someone who graduates from college in their early 20s with six figures in debt could file for bankruptcy immediately and have it be off their credit history by the time they've saved up a down payment and want to get a mortgage.

So change the bankruptcy law? It’s a pretty easy fix. Create a whole new chapter if that’s what it takes. Make it dischargeable only after 7 years of nonpayment, do means testing… bankruptcy law already has these kinds of nuances built in.

Re: America's pensions can't beat Vanguard but they can close a hospital

#239

Post by AnthonyMouse » Tue, Feb 17, 2026, 5:33 PM UTC

thatcat wrote: post #205

AnthonyMouse wrote: post #176

Earlier quoted context omitted.

> Why can I, as an 18 year old, sign for a loan that _cannot_ be forgiven, graduate into a crashed economy, and still be held accountable for choices that impact me when I only had a small part in them? Because you took the money promising to pay it back, spent it on something you wanted, and now it's gone and someone has to pay the money you spent. It's like saying why can I, as an 18 year old, purposely drive a car…

The money can't be spent on a house or any useful asset that could be resold. They wouldn't give you a loan for that at 18 because it'd be irresponsible since they know you don't know anything about finance or economics as you likely don't have an education yet. They'll give you a high interest credit card with a 500 dollar limit to buy what you want though.

They give you the loan because the asset is you. In general if you get a degree, your future earnings increase by more than the cost of the degree.

The "problem" is that if you don't pay a mortgage the bank takes the house, but the only thing for them to take if you don't pay your student loans is your future earnings, which is just the thing where you have to pay back the loan.

Re: America's pensions can't beat Vanguard but they can close a hospital

#240

Post by lokar » Tue, Feb 17, 2026, 5:33 PM UTC

criddell wrote: post #116

lokar wrote: post #39

Earlier quoted context omitted.

One round of loan forgiveness is fine, but it builds an expectation of it in the future. All of the loans, growing larger and larger, just encourage universities to grow fatter and raise costs to students. If students could not borrow enough to attend, they would be forced to lower costs (not necessarily the very top universities, but all the rest).

> encourage universities to grow fatter In a typical state school, where's most of the fat accumulating? What could be cut significantly without affecting the quality of education?

I'm not an expert, but a lot has been written on this.

Some areas:

- more and more administrative staff and "middle management". The assistant to the assistant vice chancellor for elm trees.

- Building and running very expensive science research operations. These may well be worthwhile efforts, but conflating them with undergraduate educations is a problem.

- more and more student amenities. Fancy dorms, student centers, rec centers, etc

- competitive athletics

A big part of this, is that they need to attract students, ideally ones who can pay or borrow. And students are putting a lot of weight on the research programs (they impact public ratings), fancy dorms, rec centers, football teams, etc. And they are spending loan money, and don't seem to fully grasp the economics. But even if they did, the highest rated schools are the ones spending all this money, and thus charging more, it's a cycle. And this propagates down to mid- and lower tier schools.

And then people in the leadership ranks of these schools are in part evaluated on how the ranking of their school changes. So if you can go from spot 150 to 140 by raising fees to build stuff you don't really need to teach (but improve your ranking), that is good for you.