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Tuesday was gut-wrenching.
But Wednesday may have been even worse.
The Dow Jones Industrial Average plunged 600 points, and the Nasdaq Composite entered "correction" territory.
Somehow, though, those tumbling numbers weren't the worst thing I saw Wednesday.
Early Wednesday, veteran reporter John Stossel posted a report on the Fox News website that shook me to my core.
Here's the headline: "Politicians' Deceitful Promise That Nobody Has Been Paying Attention To."
In it, Stossel laid out the despicable fact that our states' and municipalities' pension funds are severely underfunded.
And that's led to a $6 trillion pension debt. That ticking time bomb represents a full third of the U.S. economy.
Meanwhile, Stossel explained, our politicians have nothing but platitudes. Everything is "all right," they all say.
Pensions for hardworking Americans could be cut up to 50%. And that's just a start.
What's worse is that Stossel's story is coming out when it may be too late to do anything.
This is an issue that's been building for decades.
Institutions use so-called "alternative investments" to boost performance because they are trying to make up for the $6 trillion in underfunded liabilities we've just told you about.
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Fund managers, desperate to kick the can down the road before the $6 trillion pension time bomb blows up on their watch, claim they can boost returns using exotic hedge funds, partnerships, real estate, music royalties, derivatives… you name it.
More often than not, however, this promised performance never materializes – and the fund managers lose customers.
But guaranteed pension plans can't kick the can down the road because they have to provide a certain amount of retiree income every year. So these same funds constantly take on more and more risk via increasingly speculative investments. It's all an attempt to make up the gap between the amount of money their funds can invest and the amount of money they have to return to retirees every year.
According to the Center for Retirement Research at Boston College, those alternative investment allocations skyrocketed from 9% of total assets in 2005, to 24% in 2015.
That's not slowing down. A 2017 study by Coller Capital found that 23% of pension plan administrators expect to add alternative investment allocations in the next year.
Only they won't find the high returns they crave.
That's because it would only take one pension fund defaulting to set the chain of dominos.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.