There’s a possibly apocryphal story that floats around pension fund circles. A manager for one of the largest corporate funds walks into an office suite to give his quarterly presentation to the executive policy committee. Alan Greenspan has recently made his famous “irrational exuberance” comment, and the company brass is discussing the fund’s mix of stocks and bonds. One of the execs is of the opinion that stocks have risen dramatically in the past few years and are due for a correction, and that the pension fund should reduce its equity weight substantially.
“Well, what do you think,” a more skeptical committee member asks the pension fund manager, who has been avoiding the conversation until now.
“This is what you’re doing if you take the equity weight down,” the fund manager replies, and, like a comic prop, produces a pair of dice and tumbles them across the conference table, where they come to rest in front of the exec who wants to cut back on stocks. The bearish exec frowns, there’s a moment of nervousness, and then the skeptic bursts out laughing, relieving the tension. The company decides not to cut its equity weight.
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