New York Pension Fund Looks to Sell Equities Near Record Highs

Selling stocks at record highs usually makes sense, but how do you know?  What if the market keeps climbing?

New York pension officials are struggling with that decision, and are considering selling some stock and buying bonds.  The problem is that the pension fund must pay $1 billion in benefits every month, and locking in very low bond yields won’t do much to help support those benefits.

On the other side, if the pension fund doesn’t reallocate and stocks sell off, then the fund will be forced to sell stocks at lower prices to pay the benefits.

Chief Investment Officer Anastasia Titarchuk said:

“At this point in the cycle we’re much more concerned about liquidity.  If we have a downturn, I don’t want to sell equities on the low.”

“I actually give a little pause when I see the entire market move in one direction. To me that’s more of an indication that it’s a crowded trade.”

There’s a reason equities are a crowded trade.  The Fed and other central banks around the world have driven rates so low that there’s almost no yield left.  Often investors are better off to buy dividend stocks than bonds.  They earn the same yield and have the chance for capital gain.  Of course, they can also suffer losses.

Thank you, Federal Reserve.

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1 Comment

  1. Why not just liquidate some equities and put the revenue into high liquidity interest bearing accounts that are not tied directly or indirectly to the stock market ? This would at least shield the pension fund during a future stock downturn.

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