Issues & Opinions

From today’s Independent, a story about a study funded by the mobile phone companies:

Radiation from mobile phones delays and reduces sleep, and causes headaches and confusion, according to a new study.

The research, sponsored by the mobile phone companies themselves, shows that using the handsets before bed causes people to take longer to reach the deeper stages of sleep and to spend less time in them, interfering with the body’s ability to repair damage suffered during the day.

…

Published by the Massachusetts Institute of Technology’s Progress in Electromagnetics Research Symposium and funded by the Mobile Manufacturers Forum, representing the main handset companies, it has caused serious concern among top sleep experts, one of whom said that there was now “more than sufficient evidence” to show that the radiation “affects deep sleep”.

(ellipsis mine)

The report refers to a “massive study” of 1,656 Belgian teenagers, the results of which are claimed to complement the lab studies done by MIT et al. Those MIT studies noted a significant effect (with “significant” left undefined in the article) on the level of tiredness found in study participants the day after exposure to RF in the 884MHz range.

The embarrassed Mobile Manufacturers Forum played down the results, insisting – at apparent variance with this published conclusion – that its “results were inconclusive” and that “the researchers did not claim that exposure caused sleep disturbance”.

The MMF should be embarrassed, for two reasons. First, it’s silly to assume that RF emissions have no effect on their surroundings, and it’s not unreasonable to try to quantify these effects, good, bad, or indifferent. More importantly, if you’re going to downplay the results of the study you’ve funded as “inconclusive”, you ought to at least not do so by simply & directly contradicting the stated result of the study. While holding no opinion on the degree to which sleep can be disrupted, I’m sympathetic to their conundrum, but there are far more credible ways to spin a study’s results than just to reflexively deny its conclusion.

In particular, the definition of “very tired”, judged in isolation from other influences on sleep, seems subjective to the point of absurdity, particularly in a study of only 70-odd people. I’m sure they considered this, of course, but it would be nice to read how they’d attempted to adjust for the effect.

It’s an interesting article either way, made more so by the omission (if not in the study, in the article itself) of any control group who’d simply used a wired phone during the same periods of the day. The lab tests, with RF but sans actual phone use, go some (undefined) way toward finding causality, but while studying the overall effect of late night phone use, it seems ludicrous to ignore the fact of actual conversation.

Because, at least in this case, the medium, all due respect to Marshall McLuhan, is not the message.

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From the Los Angeles Times, via a WSJ email snippet this morning:

Los Angeles Times: While in private business, Mitt Romney — whose presidential campaign cites his record of closing state tax loopholes as Massachusetts governor — used shell companies in two offshore tax havens to help eligible investors avoid paying U.S. taxes, federal and state records show. Mr. Romney gained no personal tax benefit from the legal operations in Bermuda and the Cayman Islands, but his aides and former colleagues acknowledged that the tax-friendly jurisdictions helped attract billions of additional investment dollars to Mr. Romney’s former company, Bain Capital, and thus boosted profits for Romney and his partners.

Sadly, this tells me nothing I didn’t already know about Mitt Romney - he’s clearly a smart guy, and he’s clearly a competent businessman. Whether either of those makes him the best suited presidential candidate is both another thing completely and a matter which doesn’t concern me at all right now.

However, the intimation that there’s some undercurrent of hypocrisy here strikes me as overbaked by half - he used the system, properly & as designed, to benefit those to whom he had a fiduciary duty. The fact that he and his partners boosted their profits from having satisfied their clients strikes me as precisely the result he expected, and deserved.

Surely there are other crucial things about him we need to know, but this ain’t on that list.

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Who knew? There’s a backlash against tithing, according to today’s WSJ.

Perhaps everyone but me knew, since I’m an irreligious fellow.

That last trait makes it predictable that I’d point out the obvious: that churches are a business, like any other. It is hard to argue otherwise, concerns about heavenly salvation and eternal damnation notwithstanding. Denominations, and the churches within them, compete with one another for congregants, and they do so with a variety of devices.

The Megachurch Effect

Resistance to tithing has been increasing steadily in recent years, as more churchgoers have questioned the way their churches spend money. Like other philanthropists today, religious givers want to see exactly how their donations are being used. In some cases, the growth of megachurches, some with expensive worship centers equipped with coffee bars and widescreen TVs, have turned people off of tithing. And those who object are finding like-minded souls on the Web in theological forums.

(emphasis mine)

Several things could explain churches’ splashing out on such non-eternity-related items as coffee bars or the long-term lease and $100 million renovation of the Houston Compaq Center (nee Summit), but the three most obvious are grandiosity, marketing, and both. A for-profit business might engage in the same sorts of activities, for the same reasons. And bully for both, the secular and the spiritual - it’s all part of the game of making certain your operations remain funded. Customer retention is an issue in both spheres:

Church leaders say tithing isn’t just a theological issue, but a financial one. Americans gave an estimated $97 billion to congregations in 2006, almost a third of the country’s $295 billion in charitable donations, according to Giving USA Foundation, a nonprofit educational organization in Glenview, Ill. But giving to religion is growing more slowly than other types of giving, says Patrick Rooney, director of research at the Center on Philanthropy at Indiana University. That’s partly because people are attending church less frequently, says Mr. Rooney, and are giving to a wider array of causes, including secular ones.

The difference is, that you’d seldom (never?) hear a businessman outside of religion making a comment like this:

That worries some church leaders. “If everyone gives 2% of their income because that’s what they feel like giving, you aren’t going to have money to pay the light bill and keep the doors open,” says Duane Rice, an official with Evangelical Friends International, a denomination that believes that tithing is required by the Bible.

Ignore, please, the nougatty richness of Mr. Rice’s appeal to biblical authority in claiming religion’s right to proportionate payments, and focus just on the plaintive cry that, well, it’s got to be 10%, because if not, well, they’ll not be able to keep the lights on.

He’s badly confused on cause and effect here. For-profit or not, the lights going off is God’s way of saying you didn’t make your customers happy, thus bringing in enough money, and not the other way around.

“From each according to his ability, to each according to his need”

Karl Marx would be so proud. Up to but not including the empire-building, self-importance, and rank perfidy sometimes seen in the clergy.

I could hardly care less how tricked-out any given religion cares to make itself. As long as they can get people to pay for the services offered, more power to them. Offering a service people value is how business is done. Whining when you find that they don’t value your service? Not very businesslike at all.

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From Bloomberg, dated yesterday (first seen in this morning’s WSJ - Breakingviews column):

Nov. 5 (Bloomberg) — Gisele Bundchen wants to remain the world’s richest model and is insisting that she be paid in almost any currency but the U.S. dollar.

Or perhaps not - the story might be apocryphal, and even contains its own counterargument:

“Contracts starting now are more attractive in euros because we don’t know what will happen to the dollar,” Patricia Bundchen, the model’s twin sister and manager in Brazil, said in a telephone interview in September from Sao Paulo. She declined to discuss details of the arrangements last week.

No shock, that. The question is, how long it remains true.

“Gisele has contracts in dollars,” said Anne Nelson, Bundchen’s agent in New York at IMG Models, in an interview today. “When she works in Europe she gets paid in euros, when she works in the U.S. she gets paid in dollars, when she works in Brazil she gets paid in reais, and so on and so forth.”

Also self-evident. And it goes without saying that, in a world of fixed exchange rates (which, with few exceptions, doesn’t exist now and hasn’t for years), she could choose to simply do the math, and get her desired real pay rate at whatever nominal rate & currency she chose.

The fact that she or her IMG handler is reported to have decided to denominate pay in a currency other than dollars, presumably for future contracts, brings to mind the market mania of early this century, when people actually thought tech stocks would stay high forever.

Read the rest of the Bloomberg piece, by the way - it provides far more detail than did the Breakingviews column (due to format and space availability differences, I’m sure), and goes well beyond the only-moderately interesting fact of Gisele Bundchen’s purported payment preferences.

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From the just-prior entry here, this was the closing line:

Let the race resume, because this melodrama has several acts yet to play, but it seems unlikely at this point that, regardless of moves in the prices of assets under their management, Messrs Cayne & Prince will repeat the mistaken actions of Mr. O’Neal.

Unsurprisingly, it turns out that even without repeating the mistakes of Mr. O’Neal, it’s pretty easy for other members of the august group of executives listed above to be kicked to the curb.

Today’s WSJ, in an article too long and beefy to effectively excerpt without violating fair use, entitled “Bear CEO’s Handling Of Crisis Raises Issues“, you’ll find the anatomy of a palace coup. Omitting only malfeasance, fraud, and necrophilia, Mr. Cayne is “charged” (in the sense of the items having been discussed in a front page WSJ article) with a laundry list of complaints. Among them:

• Lack of attention to detail
• Excessive enjoyment of personal time
• Being filthy rich
• Enjoying golf and bridge
• Being a marijuana smoker

One of these charges is not like the others. And the article in which the complaints appears is made quite lopsided by the short, seemingly random inclusion of his alleged preference for the killer weed.

Sure, the article has lots of quotes from supportive staff members, relating that he’s always reachable when needed, totally engaged in the business, and so forth. But the overall picture gives the impression of a calculated character assassination.

Not that there’s anything wrong with that, mind you - perhaps he even deserves it. But this one is so heavy-handed, that my first thought on reading it was “Cui bono?“. I don’t know who might be among the “players” within Bear Stearns, but surely in a firm known for its sharp elbowed trading prowess, they must be found in every corner office, no? Honestly, though, this one makes the attempted embarrassment of Blackstone’s Stephen Schwarzman look like a grade-school taunt.

The connection, to the extent one exists, between Mr. Cayne’s current agonies and those of Mr. O’Neal might be the “alumni network”. Apropos nothing much, there’s this, from the WSJ story of Nov 1:

Late in June, as the outcry from investors in Bear’s hedge funds grew, Bear authorized an 11th-hour loan of up to $3.2 billion to the less-risky of the two beleaguered funds. The fund ultimately borrowed about half that amount from its parent company.

On July 12, chatting with visitors over lunch, Mr. Cayne seemed less interested in discussing the markets than in talking about a breakfast-cereal allergy and his stash of unlabeled Cuban cigars. On another occasion, he told a visitor he pays $140 apiece for the cigars, keeping them in a humidor under his desk.

Five days later managers of both funds informed investors their holdings were virtually worthless.

The next day, July 18, Mr. Cayne left for Nashville to play in the bridge tournament, accompanied by his wife, Patricia, who is a neuropsychologist and another avid bridge player. Mr. Cayne took part in a prestigious event called Spingold KO. He was in Nashville all or parts of 10 days, according to bridge and hotel records.

For most of that time, Warren Spector — then co-president of Bear and also a competitive bridge player — was in Nashville as well. Mr. Spector was in charge of asset management at Bear, along with all of its trading operations and its prime-brokerage unit, which handles trades for big clients such as hedge funds as well as lending them money.

…

Amid the turmoil, Mr. Cayne on Aug. 1 called in Mr. Spector, the co-president who had been with him at Nashville. Mr. Cayne was annoyed that Mr. Spector had been away from the office during the fund crisis, according to people familiar with his thinking. He told Mr. Spector he had lost Mr. Cayne’s confidence and should resign, these people say.

(ellipsis mine)

Just being a conspiracy-monger, I find myself wondering whether this is all just a comeuppance delivered on behalf of, or directly by, Warren Spector? Seems pretty obvious, I know, but his having taken the bullet several months ago on Bear’s behalf seemed odd at the time (since they were both at the same tournament), and seems odder now.

Perhaps, then, Cayne’s getting knifed by a guy who owes him a knifing. Perhaps it’s far broader than that.

But it might provide an object lesson: Make sure you’ve got competent friends and incompetent enemies. Corollary: Be sure not to convert a competent friend into an enemy.

And it’s not over yet. Tomorrow’s WSJ will contain a follow on, entitled “CEO of Crisis-Hit Bear Denies He Used Marijuana“, (a gratuitous pile-on, I think, given that the original article also contained his denial) including this:

In a note to clients, Punk, Ziegel & Co.’s Richard Bove said “the article clearly places the company in play” because Mr. Cayne would more likely sell Bear than retire “in disgrace.”

The original WSJ piece, above, reported that Bear (which is heavily owned by employees, with Mr Cayne being personally among the largest shareholders) has been able to spurn earlier merger approaches:

He [Mr. Cayne] has resisted overtures to sell Bear. In 2002, when Mr. Dimon, then head of Bank One Corp., raised the possibility of buying Bear, Mr. Cayne didn’t give the idea much consideration, according to people to whom he spoke. Mr. Cayne told members of Bear’s executive committee he would do a deal only for a significant stock price premium, a big personal payout and the use of a private jet, say people familiar with the conversation. The takeover idea ultimately faded away.

So, of course, another plausible explanation for an airline toilet being dumped on his head, aside from the possibility of revenge from a former associate, is that this is all a bit of inside baseball, and that one way or another, Bear’s going to be owned by someone else.

Ignoring the unsavory undertones of such a public defenestration, this story seems likely to get more interesting before it gets boring.

Addendum - Might as well throw this one in too, to keep the circle (Cayne/O’Neal/Prince) complete. In addition to continued rumblings about Prince’s stewardship of the post-Sandy Weill Citigroup, WSJ’s Deal Blog reports other strange things potentially afoot at the Circle K.

Addendum - (11/2/2007 3:24PM) This just in:

NEWS ALERT from The Wall Street Journal

Nov. 2, 2007

Citigroup board members are expected to gather for an emergency meeting this weekend, two people familiar with the matter said. The meeting comes amid worries of potential writedowns and pressure on CEO Charles Prince.

Addendum - (11/4/2007 5:15PM) No story link yet, just an alert from WSJ:

NEWS ALERT from The Wall Street Journal

November 4, 2007

Citigroup CEO Charles Prince resigned at a board meeting Sunday, as the bank faces big new losses from distressed mortgage assets. Board member Robert Rubin, the influential chairman of the company’s executive committee, will be named Citigroup chairman, while Sir Win Bischoff, chairman of Citi Europe, will become interim CEO.

I’m sure the story will be up shortly, and of course this event is no surprise. What will surprise me, however, is if the chattering classes avoid the usual hand-wringing and shirt-rending over his “exit package”.

Like Merrill Lynch, Citigroup has no reported severance agreements in place for its exiting CEO. Stan O’Neal walked away with about $160 million, and Prince is reportedly set to leave with about $40 million. In the first case, the storyline was that O’Neal got a massive golden handshake. A fairer reading might indicate that he just received what he’d earned and owned. This would also be the case for Prince at $40 million - to all appearances so far, he’s got an earned and owned stake of $40 million.

Even operating under the presumption that they were both constructively fired for cause, there’s no case to be made for depriving either of what they already own. I look forward, perhaps futilely, to press coverage that recognizes this, if in fact it also ends up being true in Mr. Prince’s case.

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This just in (1:07PM CST)

NEWS ALERT
from The Wall Street Journal

Oct. 28, 2007

Merrill Lynch CEO Stan O’Neal has decided to leave the firm in the wake of $8.4 billion in write-downs and an unauthorized overture to Wachovia, a person familiar with the matter says. An announcement on his departure could come today or Monday morning, this person said.

FORE MORE INFORMATION, see:
http://online.wsj.com/article/SB119359304744274091.html?mod=djemalert

And the sub-prime mess gets its first big scalp.

Yesterdays Saturday WSJ included a piece of Breakingviews commentary entitled “O’Neal Leads Race for Exit”, with the provocative subtitle “Merrill Chief Speeds Past Citi’s Prince, Bear’s Cayne On Endangered CEO List”.

Mr. O’Neal has, to all appearances, done a fine job at Merrill, recent events excluded. He’s also been amply rewarded.

Is he being turfed (let’s not pretend to believe he made this decision himself) because of the mortgage-based losses? Not directly, it seems. In no particular order:

• Over the years (see WSJ article first linked), he’s had “issues” with competition for control, and has left numerous enemies alive to snipe at him from elsewhere
• He spoke with Wachovia about a merger, absent board approval - major faux pas, even if he “owned” the board
• He announced expectations of a $5 billion write down several weeks ago, but reported an actual $8.4 billion write down

The first of these makes for good gossip fodder amongst the denizens of the Street, I’m sure, and one can surely find unrequited antipathy for the CEO of any large firm, if one looks hard enough. Unless the jilted former executives have tight ties to current board members, however, they’re unlikely to have directly affected the calculus on this one.

The second of these is quite unseemly - he’s reported to have no severance arrangement in his employment agreement, but would do well ($200 million+) in the event of a change of control. If he assumed his position had become otherwise untenable, that Merrill was in deep, deep trouble, or both, the approach to Wachovia would be understandable, if still strategically and logically dubious. Appearance of a money grab is bad, emulating Britain’s Northern Rock by being seen to need help in the worst way is even worse. Either of these would be a firing offense to any competent board of directors.

Of the last item, the best thing to say might be “If you don’t know, don’t say. And if you don’t know, don’t say you don’t know, either”. Wall Street firms, particularly those with trillion dollar balance sheets, and double-particularly those run by former CFOs (the post from which Mr. O’Neal made his bones) are supposed to know what their balance sheets look like at all times. The income statement? Yeah, that’s important, but the balance sheet, and the value of items therein, isn’t supposed to be subject to nearly as much interpretation as is the income statement.

If, as CEO, you violate the first maxim above, forecast a result, and get lucky, so be it. But if you do so and miss the number within weeks, you’ve also violated the second maxim, and have shown your lack of control of the business. Pretty obviously, in a business that relies on sound risk management, this too is a firing offense.

It also stands the chance of raising the curtain on one of Wall Street’s alleged dirty secrets - the fact that they pull valuations out of thin air. Two pieces at a favorite site of mine, Going Private, touch on this subject. The first “Liquid Reflections“, discusses in some detail the innards of the CDO market. The second, an earlier piece entitled “Anatomy of a Meltdown?” describes an entirely plausible framework in which a debt market participant might easily misprice its holdings, while trying to outrun a presumed short-term disruption in the market. If Merrill’s forecasting innumeracy happens to be related to having had a “fluid” model for pricing its holdings, Mr. O’Neal won’t be the last to leave, and any new CEO (Fink/Thain/whomever) will have to be seen to be dealing aggressively with the fact that asset valuations seem to be whatever traders want them to be at any given time.

Should that happen, it has implications far outside Merrill’s walls.

Oh, and that Breakingviews commentary’s closing line?

But if he does go, it might throw attention back on the race for second place.

Let the race resume, because this melodrama has several acts yet to play, but it seems unlikely at this point that, regardless of moves in the prices of assets under their management, Messrs Cayne & Prince will repeat the mistaken actions of Mr. O’Neal.

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But it doesn’t. From a WSJ email, dispatched this evening to my inbox, this story:

NEWS ALERT
from The Wall Street Journal

Sept. 17, 2007

William Lerach is set to plead guilty to one count of conspiracy in the criminal case involving the noted securities lawyer’s former firm, now called Milberg Weiss LLP. The plea agreement, which calls for a one to two year prison term, could be announced as soon as Tuesday.

I’m all for protecting the common man, the common investor, and I’m nothing if not both of those things. However, while Milberg Weiss (…Bershad Hynes & Lerach) LLP has always claimed that their seldom-seemly, and often seedy, pursuit of class action lawsuits, against any company whose stock price took a noteworthy downturn, was for the public good, I’ve never been able to agree.

Not in my stance as a champion of the unfettered right of public companies to run roughshod over their investors, either. Because I have no such stance. Instead, my dim view of him and all who practice his kind of law is justified by standard tactics he and his partners (current and former) have used in pursuit of specious claims. Think “greenmail”, ala Carl Icahn and Boone Pickens in the 1980s - make life tough enough for someone, even someone who’s got no basis for having to defend their actions, and they’ll pay you to go away.

As referred to in an Los Angeles Business Journal article of Sep 3, 2007, Lerach is an “economic terrorist”, and I don’t think that’s too tough a characterization of him. As the article says:

Lerach, of course, did not invent but did perfect the securities class action lawsuit. In that scheme, most any company that sustained a stock drop, even if it had nothing to do with anything of consequence, often found itself the recipient of allegations of fraud in a Lerach-engineered lawsuit. Likewise, companies that announced most anything negative could get the same kind of lawsuit – often within hours of the announcement.

Lerach then pounded the company, using the discovery process to find some little scrap somewhere in some underling’s file drawer that “proved” the company knew that bad news could develop.

In other words, this guy, and all lawyers like him, specialized in swooping in any time there was even a flimsy pretext for doing so. I mean, there’s no way a stock could drop without malfeasance and lying on the part of management, right?

Well, no - that’s wrong. But Lerach, et al, after having put their lawsuit’s stake in the ground, would then embark on forced discovery at their target companies, essentially fishing around for a reason to justify their lawsuit.

And one doesn’t have to be a big-business apologist to find that sort of thing to be outside the bounds of fair and reasonable play.

Over the years, I’ve been the recipient of at least 50 securities class action solicitations. I received one just the other day, “In re CARDINAL HEALTH, INC. SECURITIES LITIGATION“. And while I almost never take the time to participate in these paper chases, I’ve always paid particular attention to any such action which has either “Lerach Coughlin Stoia Geller Rudman & Robbins LLP” or any of the many versions of “Milberg Weiss +/-Bershad +/-Hynes +/-Lerach LLP” listed as the attorneys looking out for my “best interests”.

Because they don’t, they haven’t, and investors are simply a raw material for them and their business process. And I throw their solicitations away as soon as possible, to avoid stinking the house up.

His former partner Bershad has already pled, and if the news report is correct, Lerach’s getting ready to do the same. It’s not the Christian thing to say, but I’m not much of a Christian anyway, so I’ll hope that Milberg, Weiss, and all the rest be following them to the pokey soon after.

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In my time, I’ve seen examples of just about every scam possible via the Internet. It takes a lot any more to even get my attention as I’m one-button flushing my spam folders.

However, when someone goes above and beyond the call of scum-baggish presumption in reader/recipient stupidity, I think it deserves to be highlighted. I’m a “giver” that way.

Below, in its exact form, including the badly mangled HTML formatting, but minus the actual link to the scamster’s site, the silliest and least plausible piece of spam I think I’ve received in at least a couple days:

		After the last   annual calculations of your fiscal activity we have determined that you are eligible to receive a tax refund of $93.60. Please submit the tax refund request and allow us 6-9 days in order to process it. A refund can be delayed for a variety of reasons. For example submitting invalid records or applying after the deadline. To access your tax refund online, please click here Regards,  Internal Revenue Service

© Copyright 2007,   Internal Revenue Service U.S.A. All rights reserved..

• The IRS always communicates with me by sending me email at my blogging email address, natch
• The IRS always speaks to tax payers that way, all courtly-like, and offers its “Regards”
• The IRS always gets things done in 6-9 days
• The IRS claims copyright on all of its email messages, just like normal citizens do
• While claiming said copyright, the IRS always makes sure the recipient knows that it’s the “Internal Revenue Service U.S.A.”, to avoid confusion with all the other Internal Revenue Services around the world.

It occurs to me that if we didn’t have Russian, Romanian, and Slobovian hackers, we’d have to invent them, for our own amusement.

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Your quote of the week:

“Michigan had never played a I-AA opponent in its history. Now we know why, the Wolverines were ducking them.”

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Back on May 21, 2007, I saw an article that I almost, almost thought worthy enough of derision that it justified a post. For reasons that now escape me, I decided otherwise at the time. However, as sometimes occurs, it’s again become current, so I’ll revisit.

This, from the Austin American Statesman:

A panic attack move into private equity?
By Robert Elder | Monday, May 21, 2007, 02:07 PM

Writing in the May 18 issue of Grant’s Interest Rate Observer, Dallas investor and state of Texas pension official Frederick “Shad” Rowe tees off on the leaders of the Teacher Retirement System of Texas pension fund.

Rowe examines the Texas teacher fund’s recently announced plans to move massive amounts of its holdings into private equity and out of publicly traded stocks. The strategy strikes him as the investment equivalent of a panic attack.

(Rowe notes that the Texas Pension Review board, which he chairs, has no authority over TRS investment strategy and that he’s writing as a private citizen.)

Rowe writes that the teacher fund is trying to juice returns by moving into so-called alternative investments (hedge funds, buyout firms, hard assets such as timber, toll roads) a little late in the game. Maybe even just in time for the private equity bubble to pop and the very stocks the teacher fund is selling to rise in value.

Please ignore for a moment the fact that private equity and hedge funds are not the same thing - Rowe’s core point, I think, was that high return comes with high risk. Big shock, that. But it appeared, in May, not to have occurred to the managers of TRS. I don’t know whether TRS had gotten around to the absurd reallocation plans they announced at the time, increasing allotment to alternative investments from 3% to 35%. But Mr Rowe had the opportunity to weigh in again on the subject in a story from today’s WSJ:

Pension Managers Rethink
Their Love of Hedge Funds
By CRAIG KARMIN
August 27, 2007; Page C1

Many public pension funds in recent years have become eager to invest in hedge funds. Now, some are getting cold feet.

Pension-fund managers from Louisiana to Ohio are saying they may slow their push into these funds after the recent losses suffered at big hedge funds — including ones run by Goldman Sachs Group Inc. and AQR Capital Management — have reinforced some of the risks.

Indeed, one critic suggests that pensions would be foolish to keep pursuing hedge funds. “It’s like planning a vacation to an exotic land, and finding out that there’s an outbreak of bubonic plague,” says Frederick Rowe, chairman of the Texas Pension Review Board, which provides oversight of Texas public pension funds.

I’m not certain which is more admirable - consistency, correctness, or the fact he avoided doing an overt Icky Shuffle and rubbing their nose in it. But in any event, Mr Rowe was stating the obvious back in May, all the while not claiming there was anything inherently wrong with hedge funds or their doppelgangers in the alternative investment universe, just that the TRS was clearly not thinking things through in their sudden mania for the flavor of the month.

Good for him, and, I guess, good for the teachers covered by the TRS. I have no dog in the race, but I hope the managers of the TRS paid attention back in May, for the sake of their beneficiaries.

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