The Return of Harvard Stupid
Harvard stupid comes from thinking that you're smarter than everyone without recognizing that you still might not be smart enough to control the evil your creations threaten to unleash. The genius financial products that kept you eyes-deep in Cristal and vacation homes nearly caused the global financial system to seize up. Do you think that the titans from the University of Maine could bring the free market, the global economy to its knees? I sure don't, if for nothing else because they don't come from the right families.
- Fellow Fool Bill Mann back in October in reference to Wall Streeters (who are disproportionately Harvard-educated)
In case you missed the Vanity Fair article on Harvard's dwindling endowment, check it out here. Over the last year, Harvard's endowment lost somewhere between 23-30% of its value. That's not shocking...the S&P 500 lost that much in the last year as well. You could argue that the university should have been in safer instruments since it relies on income from the endowment for operations; but then again, you could argue that an institution that has an indefinitely long time horizon can afford to take roughly the same amount of risk as the stock market.
It's unclear how exotic Harvard's endowment got with its investments, but I can't fault it for suffering along with the rest of us. What I can fault it for is the apparent lack of fiscal restraint if the opinion of one hedge fund manager who looked at their books is correct: “They are completely [profanity].” It's yet another reminder to all of us to live below our means.