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b'In Episode 128, we welcome pension fund expert, Claude Lamoureux. We start with Claude\\u2019s background, which took him from Met Life to running the Ontario Teachers Pension Plan.\\nWhen Claude took over the pension, the fund was invested in just Canadian debt, and the size of the pension obligation was underestimated. Claude decided to use derivatives to diversify the portfolio. He expanded into the S&P, recruited an investment department, and within three years, had successfully reallocated the fund into the broad asset classes they wanted.\\nMeb asks how investing is different for a pension allocator versus an individual investor managing his own portfolio. Claude tells us that in the pension world, people don\\u2019t want to take responsibility. He wanted to do the opposite. He wanted to create a culture where people become entrepreneurial.\\nThis dovetails into a conversation about valuations. Claude is a big believer in having a realistic valuation of liabilities and potential returns. He mentions that today, many U.S. pensions are expecting around 7% returns, which he finds unrealistic. Claude says people should earn the money before they spend it.\\nThe conversation eventually turns toward Claude\\u2019s general market approach. Claude had a somewhat traditional policy portfolio, yet used lots of derivatives to diversify into stocks and non-Canadian bonds. He mentions how when you have a large deficit, you must go heavily into equities. He also liked private equity and real estate. And there was a great deal of leverage.\\nThe conversation turns toward problems in the U.S. pension system. Claude gives us his take on the issue. In short, many pension liabilities here in the States aren\\u2019t measured properly. He also mentions interest rate assumptions and the fees of outside managers. Finally, Claude points toward politicians and how they don\\u2019t want to face the facts.\\nThere\\u2019s plenty more in this pension-themed episode: the importance of being a student of the market history\\u2026the Canadian Coalition for Good Governance\\u2026the sage advice of \\u201cwhen you have to make a decision, always make the one that will let you sleep better, not the one that will let you eat better\\u201d\\u2026and of course, Claude\\u2019s most memorable trade.\\nAll this and more in Episode 128.\\nLearn more about your ad choices. Visit megaphone.fm/adchoices'