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TMFEditorsDesk (< 20)

The Return of Harvard Stupid



July 03, 2009 – Comments (6)

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.


6 Comments – Post Your Own

#1) On July 03, 2009 at 7:26 PM, RonChapmanJr (29.92) wrote:

Who coined this term?  I have a bone to pick with them.   :)

ron, Harvard c/o '03

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#2) On July 03, 2009 at 9:18 PM, streetflame (29.26) wrote:

Cristal is too new money for Harvard.  I would have gone with a Beaujolais or Bordeaux, or maybe a high end cognac or vodka.  Anyways you need more of an everyday Ivy League/Wall Street drink, not a champagne.

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#3) On July 03, 2009 at 9:28 PM, hiddenflem (64.49) wrote:

enough harvard bashing...other school's endowments did MUCH worse.

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#4) On July 04, 2009 at 11:23 AM, TMFEditorsDesk (< 20) wrote:


For comparison, here's how the other Ivy Leaguers' endowments have fared.  It's a testament to the Harvard endowment's past success and the school's reputation that we're talking about them (no one outside of DC talks about batting order changes on the Nationals, but every minute Yankee move is dissected on SportsCenter). Like you said, though, I gotta think this cost-cutting is the case on campuses everywhere...if it's true for businesses and individuals, why not colleges?


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#5) On July 06, 2009 at 10:44 AM, TMFRhino (99.27) wrote:

Well Harvard could have screwed up worse. They could have been Virginia, which apparently had to dump a bunch of illiquid assets at firesale prices to meet cash obligations.

Better title: "The Return of Virginia Stupid"

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#6) On July 06, 2009 at 1:14 PM, TMFEditorsDesk (< 20) wrote:

Ouch, fellow editor Eric (TMFRhino) turns the blog ugly!

Alternate title: "Virginia, The Harvard (endowment) of the South"

We could go down the line of colleges feeling the sting of risky investments gone awry.  As I alluded to earlier, though, Harvard, like sex, sells!

-Anand, a Virginia graduate

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