VRS Board Chairman Diana F. Cantor has set a low bar for success. In a year when throwing darts at the public securities board yielded 16.34%, she hails an additional 1.26% as impressive. In any event, her team already told us that investment decisions were prompted by a computer program.
Oh, heck, that little bit of insight was in response to questions arising from a VRS investment in Star Scientific that yielded a loss of $87,581 on an investment of $289,000. Worse, this was after a series of losses by Maureen McDonnell in the same stock. But as we have all been told, Maureen only shares her investment strategies with her financial benefactor, Jonnie Williams.
“Schultze said it is not clear why the internal program, devised by VRS investment staff to use algorithms to analyze stock data, recommended purchase of stock in a company that hadn’t turned a profit in 10 years.” – Richmond Times Dispatch
And what we don’t know is the opportunity cost of the hundreds of millions of dollars Governor McDonnell siphoned from the VRS so that he could claim he balanced the state budget. Allowing that those funds would have been spread across the risk spectrum rather than invested only in public securities, those millions would still have been yielding that net 11.8% had they not been used as a long term obligation of the state, adding to the already unfunded obligations of the system.
Chairman Cantor also fails to mention that this follows a year when the system’s investments yielded a whopping 1.4%; not a performance that enhances long-term solvency. Certainly, in her view, last year was the result of the market rather than mediocre performance by her staff. One year the Obama market, the next pure investment genius.