State Investment Officer Matt Clark said Monday that hundreds of millions of dollars in cash being held for the South Dakota Retirement System were put into index funds in recent days.
Clark and his predecessor Steve Myers have long taken a contrarian long-term view to investing, especially the public pension fund [Bob Mercer, “South Dakota Investment Office Pounces and Bets Big Cash on Falling Markets,” KELO-TV, 2020.03.16].
Clark and the State Investment Council appears to think the Dow’s rise to nearly 30K was irrational exuberance and that the past month’s 30% market crash brings us back to reality:
The council sets an allocation for stocks and similar investment from 50% to 85%, with a neutral ground of 70%.
“Markets were quite expensive prior to the recent declines. For this reason the stock allocation was at the low end of the range at 50% rather than at the normal 70%. The 20% difference was held in cash,” Clark said Monday afternoon, after trading closed on Wall Street.
“Due to the significant price declines, markets are now priced near our estimates of long-term fair value. Last Wednesday and especially last Thursday the stock allocation was increased back to the 70% neutral level,” he continued [Mercer, 2020.03.16].
Our state investors tend to do bonus-worthy work, so I’ll take their assessment of the market seriously. But for the moment, I’ll leave it to Clark and friends to buy, while I invest in more durable goods, like repairs on my trusty Beetle.