Not to pile on, but CalPERS is also down about 25% on the year due to 103% losses from real estate deals. At first I couldn’t believe what type of deals these pension funds and endowments were getting into (a Canadian pension fund was going to become majority owner in a telecom company…fortunately for them the deal fell through due to the credit crunch) but then I read that many pension and endowment funds needed 8% annual gains to meet their projections. No wonder they went after risky deals as that kind of return is hard to make consistently.

This is but one more area where projections based on “historical” returns only paid attention to that last 20 years instead of recognizing that they were an anomaly. When all is said and done, these plans have about half as much money as they need to survive over the next 20 years.