
How Much Has Harvard Really Lost? - bd
http://www.huffingtonpost.com/ed-epstein/how-much-has-harvard-real_b_152711.html
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shimon
The article discusses Harvard's investment shift away from American stocks and
bonds, into real assets such as timber forests, real estate, and stockpiles of
oil.

While these assets may have lost even more than US stocks this year, it's not
hard to imagine that this strategy still makes sense in the long term. It
really depends on whether you think this is simply a cyclical recession in the
US or whether there is a risk the US will continue to decline relative to
other nations. If the latter happens, commodities may regain value much faster
than US stocks.

~~~
nostrademons
> US will continue to decline relative to other nations. If the latter
> happens, commodities may regain value much faster than US stocks.

Somewhat paradoxically, U.S. stocks are likely to do _better_ if the U.S.
declines relative to other nations. Very few U.S. stocks make the bulk of
money in the U.S. Instead, they tend to make most of their revenues abroad
(usually from 30-70% for most S&P 500 companies) and pay most of their
_expenses_ in the U.S. If the U.S. dollar declines, their expenses drop, their
revenues increase, and so their earnings (and hence stock price) go way up. If
the U.S. _worker_ declines and can't bargain for the same standard of living
they used to have, their wage costs go down, their revenues remain constant,
and their stock price goes up.

The nightmare scenario for U.S. stocks would be if international trade goes
kaput and war breaks out. Then they'd see the bulk of their market instantly
disappear, with a resulting drop in earnings and stock price. But in this
case, you should be worrying about how not to get killed, and not where to put
your money.

~~~
shimon
Good points. The decline we should be worried about is not in the currency,
but in the competitive advantage of the US relative to other countries. If it
gets more affordable to do business elsewhere, you'll find fewer and fewer
good companies on US financial markets. (Many claim SarbOx has already done
significant damage here.) If emerging economies can continue to reduce costs
-- by tackling security problems, corruption, red tape, improving education
and infrastructure, etc. -- faster than we can, US equities may lose their
world-leading position. That's not to say it's a zero-sum game; it's quite
possible that all the world's equities markets could do well, and the US could
lead without being dominant. But equity investments are more strongly tied to
their country of origin than globally traded "real" commodities like timber or
oil, so if you think the US might lose some competitive advantage -- like if
it got significantly less appealing for valuable workers to immigrate here --
you might want to skip the stock certificates and instead buy the paper
they're printed on.

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dantheman
The amount of hate in the comments on that page is really surprising; I just
don't understand it.

~~~
mattobrien
It's a populist backlash. As far as Harvard is a proxy for our financial
elites, the commenters are upset at what they see as the government bailing
out Wall Street while ignoring Main Street.

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gaius
Where is this article originally from?

~~~
lnguyen
It looks like it really is a HuffPo article/blog post as opposed to a teaser
link to WSJ, NYTimes, etc. It'd be nice if there was a bit more citation of
quotes, numbers, etc.

And of course it's not just Harvard that's hit with losing nearly a quarter of
it's value: Yale had announced it lost 25%
[[http://seekingalpha.com/article/111196-yale-endowment-
down-2...](http://seekingalpha.com/article/111196-yale-endowment-
down-25-since-june-30)] and if you do a news search on "college endowment"
you'll see similar losses.

It'll be interesting to see how colleges cope with budget shortfalls
especially with the initiatives that they've made on the financial aid front.

There's also the fallout from the Madoff debacle that hasn't yet been factored
in: [http://www.usnews.com/blogs/paper-trail/2008/12/22/tufts-
yes...](http://www.usnews.com/blogs/paper-trail/2008/12/22/tufts-yeshiva-new-
york-law-school-and-harvard-hurt-by-madoff.html)

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unrealwh
whats the surprise? in good markets, excess risk makes you rich. in bad
markets. it kills you. the able manager knows when to realign the portfolio

