Yep, the august Mr. Atwood, executive director of the Illinois State Board of Investment [note to WSJ, see my post: esp. #4] who oversees the investment of $10+ billion in pension funds, just learned that he had spent about $2 million more than he should have because he didn’t do his homework.
Our readers know better. After hearing IFO herself repeatedly advise (okay – nag) you to dig into the weeds to understand everything possible about the industry and company you are investing in, they know what to do. If not, don’t feel too, too bad.
The Wall Street Journal has just chronicled the embarrassing story of Mr. Atwood’s lesson in investment management. Below are a few snippets from the story, but we highly recommend reading the whole thing, plus the comments, many of which contain good information about how firms advising and buying for pension funds operate.
Subject: currency trading. Emphasis added.
A consultant said his fund paid $2 million more than the average of other institutional investors on currency transactions during most of last year. When Mr. Atwood tried to figure out the costs on his own, he received a two-foot-high stack of trading documents he didn’t know how to interpret.
“If you don’t pay attention, you do so at your own peril,” says Mr. Atwood, a 49-year-old former money manager.
We are tempted to laugh until we remember that we, too, have skimped on research, often to our deep sorrow.