. >> reporter: finance professor zvi bodie says to earn more, pension funds have to make risky investments that could fail, in order to pay for benefits that are guaranteed. so why not invest it all in safe u.s. treasuries which have been paying about 4% to 4.5% lately. that way the pension fund will also be guaranteed? >> those are long-term obligations which are going to be paid for sure, pension benefits are just like that. >> reporter: by contrast, bodie points out, stocks are subject to all sorts of risks. imagine the reaction to, say, an act of nuclear terrorism; a tsunami that drowns new york; a meteor barrage that signals a killer asteroid attack. okay, hollywood scare films may seem ridiculous for pension planning. but, says bodie, back in 1989, when the japanese stock market peaked, the disaster there since would also have been utterly implausible. >> you and i both remember in the 1980s how everyone you talked to thought the japanese economy was overtaking the u.s. economy. 22 years have gone by since then and the market in the u.s. is up. the japanese who were supposed to outpe

. >> reporter: finance professor zvi bodie says to earn more, pension funds have to make risky investments that could fail, in order to pay for benefits that are guaranteed. so why not invest it all in safe u.s. treasuries which have been paying about 4% to 4.5% lately. that way the pension fund will also be guaranteed? >> those are long-term obligations which are going to be paid for sure, pension benefits are just like that. >> reporter: by contrast, bodie points out, stocks are subject to all sorts of risks. imagine the reaction to, say, an act of nuclear terrorism; a tsunami that drowns new york; a meteor barrage that signals a killer asteroid attack. okay, hollywood scare films may seem ridiculous for pension planning. but, says bodie, back in 1989, when the japanese stock market peaked, the disaster there since would also have been utterly implausible. >> you and i both remember in the 1980s how everyone you talked to thought the japanese economy was overtaking the u.s. economy. 22 years have gone by since then and the market in the u.s. is up. the japanese who were supposed to outpe