tag:blogger.com,1999:blog-504086430125591940.post3315730961995371278..comments2023-09-15T10:48:24.176-04:00Comments on The Itinerant Professor: A refreshing endowment storyDonald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-504086430125591940.post-63027352338292525232009-09-02T12:18:27.907-04:002009-09-02T12:18:27.907-04:00I think there's a chicken-and-egg problem here...I think there's a chicken-and-egg problem here -- did the universities pursue aggressive investment strategies because of the need to pour more into the operating budgets? Or did the aggressive strategies (and resulting high returns earned in the early part of this decade) push them to expand spending?<br /><br />One could argue that the large downside we're seeing now should have been expected when you investment with such a large beta. The problem is that the institutions weren't prepared for coping with the downturn in contributions to their operating budgets.Donald Hellerhttps://www.blogger.com/profile/13255378507407179004noreply@blogger.comtag:blogger.com,1999:blog-504086430125591940.post-54983242738183086722009-09-01T22:09:47.724-04:002009-09-01T22:09:47.724-04:00Don - acknowledging a small conflict of interest, ...Don - acknowledging a small conflict of interest, it seems to me that a large part of the trauma caused by drops in endowment size relates to universities' fiscal policies (aggressive expansion of spending) rather than the investment strategy deployed. Universities seemed to set budgets assuming that 10-20% annual returns were guaranteed. Universities (along with all investors) would still be suffering had they set more conservative spending plans. However, a lot of the sting can be attributed to liabilities created in the last 2-4 years.<br /><br />Oddly, it was only two years ago that universities were being pushed by Congress to increase endowment contributions to annual budgets.Anonymoushttps://www.blogger.com/profile/06560390848980975861noreply@blogger.com