Saturday, September 13, 2014

Looking for a reason to get rid of Doug Lasher? Here ya go!

Lasher is in charge, as I understand it, of this county's investments.

To call the performance of these "investments" disappointing is to do a disservice to the word.

From a FOIA request, this is how our investments have been doing lately - You can get better return in some passbook saving accounts:

Here are the stats:
                                                 2011                         2012                           2013
Investments (Avg)         $501,685,554         $521,298,177          $549,357,555
Investment Rate (Avg)          0.501%                    0.404%                       0.383%

When you factor in inflation, we are losing money on the county's investments.

Let me repeat that:

When you factor in inflation, we are losing money on the county's investments.  With inflation figured in, we are getting a smaller amount of money back than we would if we'd dumped it all into a credit union passbook savings account!

As a county, we'd have returned a higher rate if he'd just put it all in credit union CD's!

Too complacent.  Not looking out for us.  Missed opportunities... mailing it in.

I was more or less indifferent about this race.  But these kinds of returns?

There's no excuse for that.

Here's the policy... check it for yourself.


Pete Masterson said...

As a retired person who survives on the income from my investments my observation is that the County Treasurer is doing no worse than most considering the parameters and limitations in the policy guidelines (as linked).

The guidelines essentially leave the Treasurer with few options that generate more income than the current "money market" returns. All the investments are short term -- to very short term. The longest is 5 years (U.S. Treasury Bills only) and the others run to 180 days or less. With these time limits, there is little interest to be found at the current depressed rates (thanks to the actions of the Fed). Indeed, my own "cash position" is generating returns at or below what the county has managed. If it weren't for more risky and/or longer term investments (that the county isn't allowed to utilize) I would be falling behind inflation.

There are probably many reasons to criticize Mr. Lasher -- but I must disagree that the returns on the county's cash balances are fair to criticize. With the principles of "safety" "liquidity" given the highest priority in the policy, there is little opportunity for superior returns. (Indeed, in the current market, with the potential for interest rate increases (from the Fed), longer term bonds are quite likely to have significant losses in the face of higher rates. (I do not hold any bond instruments with maturities more than a couple of weeks.))

Pete Masterson said...

After reviewing the policy -- which requires "safety" and "liquidity" as the top priorities, the county treasurer has little leeway in selecting investments. Essentially, he is limited to the equivalent of "money market fund" type investments -- with a very short maturity period. (The longest, (U.S. Treasury instruments) is 5 years. All other categories are 180 days or less.

There simply is not much return to be found in the few investment categories allowed under these circumstances.

As an investor, I face the same problem -- and the 'immediate cash" portion of my portfolio has a return of around .2 to .3% -- with similar requirements (safety and liquidity) that apply to the County's funds.

There may be many reasons to criticize Mr. Lasher -- but return on the county's cash balances is probably not one of them. The returns are no worse than most "safe and liquid" holdings.

Just a guy said...

I'm a bottom line kind of guy: and my bottom line is this: we ended up with less money than we started with because the return was slim to non-existent and inflation ate that up easily.

We MUST get a better return on our money. That Lasher apparently was unable to achieve that over the last 3 years equates to a reason to replace him with someone who can.

Insanity is frequently defined as doing the same thing, over and over again, while expecting a different outcome.

We need a better return. To me, there is a difference between "safety" and "liquidity" and settling for a net negative as the outcome year after year.

He's had the gig for what, 30+ years?

That's long enough. And he should go.

Pete Masterson said...

Note: sorry for the double post. The captcha confused me when I thought it had lost the first post.

OK. simple answer: To earn more on the investments made, the policy on the allowed types of investment must be changed. That is likely not a great idea, as politicians (or government bureaucrats) rarely do a good job.

The real problem is not the person doing the investments, but rather the policy that limits the investments to, essentially, money market funds that barely pay .3% annual return. The low return is a direct result of the manipulations by the Fed of interest rates.

Frankly, interest rates should be set by the market (not a secretive bank chartered by the government).

I note that in 1994 years ago, Orange County (California) became the largest county to have declared bankruptcy. Their treasurer was attempting to maximize investment returns, but did not allow for an increase in interest rates -- that then occurred. After the voters refused to grant a tax increase to cover the losses, the county filed for bankruptcy.

Better that Clark County have low (but typical market rate) returns with safety and liquidity ensured, than to invest in highly speculative instruments that might "bite back" if an unexpected situation develops.