Foreword xi
Preface xiii
Acknowledgments xv
About the Author xvii
Chapter 1 Your Worst Nightmare 1
The Family 2
The Work 9
Where Does That Leave You? 15
Chapter 2 Dimensioning the Problem 17
Calculating the Sufficiency of Savings 18
Chapter 3 You Can’t Build Your Walls High Enough 43
The Problem of Retirement Income Security 43
Generational Warfare over the “Privilege Gap” 47
Feeding the World 51
Post-Crisis Policy Adjustments 58
The Demographic Monster Stalking Us 61
Chapter 4 Money Matters 63
Enter Modern Portfolio Theory 63
The Search for Alpha 65
The Age of Derivatives 67
The Birth of Hedge Funds 72
Alpha/Beta Separation 73
The Origins of Alpha 75
Static versus Dynamic Assets and Liabilities 75
Summing Up 78
Chapter 5 Reinventing Retirement 81
Defined Benefit Plans 81
Defined Contribution Plans 82
Who’s the Client After All? 84
The Changing Landscape 85
The Perfect Storm 87
Chapter 6 Alternatives Are Not Only for the Rich and Famous 93
Pension Assets and the Move Toward Alternative Assets 93
The Great Hedge Fund Debate 95
The Institutionalization of Hedge Funds 103
Chapter 7 The Long and the Short of It . . . Trust Me 115
Alpha from Operations 116
Operational Risk 117
Securities Lending History 119
The Securities Lending Market 121
Securities Lending Flow, Process, and Mechanics 124
Ratio Lending 131
The Rehypothecation Two-Step 132
Chapter 8 Liability-Driven Alpha 137
Painting the Recent Pension Landscape 139
Risks 140
Basic LDI Guidelines 142
Chapter 9 Power Tools for Pensions 145
Pension Benefit Guaranty Corporation 146
Factors Affecting the PBGC Insurance Programs 147
Plan Terminations 149
Pension Risk Transfer 150
Synthetic Mutual Fund Notes 161
The Role for Pension Funds 165
The Yale Model (the Illiquidity Premium) versus the All-Weather Model 167
Chapter 10 The Poverty of Nations (Apologies to Adam Smith) 175
Is There a Path to Salvation? 176
The Chilean Terrarium 179
Chapter 11 The Ultimate Solution 187
The Nation, State, Municipality, and Company 187
You as an Individual 191
Chapter 12 A Peaceful Night’s Sleep 195
What Our Family Looks Like Now 198
Concluding Thoughts 201
Works Cited 203
Index 209
Richard A. Marin is a former Wall Street executive who currently serves as President and CEO of the New York Wheel project. He teaches finance and asset management at the Johnson Graduate School of Management at Cornell University, where he is a Clinical Professor of Asset Management. He is the founder of Beehive Ventures, a venture capital fund, and Ironwood Global, a distressed mortgage hedge fund.
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