PERS fund up $1.15 billion

CARSON CITY -- Ken Lambert, the chief investment officer for the Public Employees Retirement System, was more than happy in divulging he made $1.15 billion on Monday for his agency's 104,000 members and 40,000 retirees.

"We are making money by the minute," said Lambert, who watched the Wall Street Journal Web site and CNBC accounts of the record surge on Wall Street. "The money I invested Friday is looking better by the minute."

Even with the record one-day PERS gain caused by the 936-point climb in the Dow Jones industrials, Lambert said PERS still is $3 billion short of the $22 billion in investments it had at the close of the fiscal year on June 30.

But he remains bullish on stock investments and is confident that the Dow, which peaked at more than 14,000 in October 2007, will return to that level.The Dow stood at 9,387 after Monday's 11 percent gain. That increase was the biggest since March 15, 1933.

The Standard & Poors 500 index, which increased 11.6 percent Monday, is a better indication of what happens with PERS investments, Lambert added.

"Now is the time to buy (stock)," he said. "If you don't need money now, it is a great buying opportunity. I am very optimistic. Buy when the market is down and sell when it is high."

While PERS did more than great on Monday, Nevada Treasurer Kate Marshall said she has less than one-half of 1 percent of the state's investments in Wall Street stock.

The treasurer invests $3.5 billion to $4 billion a day and has not lost or gained any money on stock since the market began dropping in October 2007.

Unlike PERS, which seeks long-term gains that average at least 8 percent a year, the treasurer makes short-term investments, usually in treasury notes, since the money she invests generally is used to pay the state's bills.

Because everyone rushed to buy treasury notes during the stock market's collapse, Marshall said treasury notes now pay 1 percent in interest.

Last year she averaged a 5 percent interest return; in the last quarter she earned 3 percent.

"I am trying to keep the state money safe," Marshall said.

Marshall said she got out of the stock market in October 2007 and she resisted requests that Nevada buy into Freddie Mac and Fannie Mae.

State treasury investments will draw about $16 million in interest this year, compared to $55 million last year.

Even if the market were to drop another 20 percent, Lambert said he would advise people to buy stock.

He said stocks today are selling at their lowest levels since the 1990s, although corporate profits are twice as high now.

Lambert even invested $100 million in stock on Friday, at the end of the week when stock values dropped 18.4 percent.

PERS makes its investments as follows: 40 percent U.S. bonds, 30 percent U.S. stocks, 15 percent foreign stocks, 5 percent foreign bonds and 10 percent other investments, including real estate.

PERS has averaged 10 percent annual gains since 1984, even though it has gone through three recessions, according to Lambert.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.