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Ivy League Investments

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Now, this emerging-market-heavy filing is clearly not representative of Harvard's overall asset-management strategy. As HMC's asset-allocations data show, the endowment allocated about 11 percent of its total to emerging market stocks. (By contrast, nearly half of the portfolio described in HMC's 13-F was in emerging market stocks.) But it does show that even the best, most experienced, and highly regarded long-term investors can get suckered into new-era thinking and make investments that turn out to be highly risky bets. The 13-F shows that the managers running this Harvard porfolio were huge believers in the decoupling theory—i.e., that emerging markets would continue to thrive even as the United States stalled—and in the notion that commodities would keep booming.

Why did this belief persist for so long? The answer would make a great Harvard Business School case study.

Daniel Gross is the Moneybox columnist for Slate and the business columnist for Newsweek. You can e-mail him at moneybox@slate.com . He is the author of Pop! Why Bubbles Are Great for the Economy.

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Posted By: idonow @ 11/19/2008 11:47:12 AM

they charge tuition so people named fat joey don't hang around and take up space, taking advantage of a "free" education that they are not capable of utilizing
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Posted By: C. MacLean @ 11/19/2008 9:53:01 AM

Everyone who invested in emerging international markets understood they were considered aggressive investments - they are known to have the potential for high returns as well as high losses.

So the market has tanked, and Harvard lost money in the short-term. Big deal. That's why the strategy is called LONG-TERM investing - to maximize the trends - and DIVERSIFICATION - to spred the risk. Investing 11% of one's portfolio in higher risk investments is exactly what a good manager is supposed to do.

Now - if Harvard had invested large amounts of their endowment in, say, credit swaps and sub-prime mortgages, Mr. Gross might have a journalistic question to ask.

As it is, let's see what their endowment fund looks like in 2 years, and in 5 years.

I'm guessing it will look just fine.
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Posted By: mbolling @ 11/18/2008 10:47:39 PM

Really? This article focuses on 11% of the endowment? I am sure everyone working for the Harvard endowment would tell you that they do not know what any market is going to do in the future, which is why they diversify. I am sure that when you look at their portfolio as a whole it will have fared much better than the portion you cited. They get paid to get an overall return, not to never loose money. They understand this but clearly you do not, which is why you are a writer and they are managing over 40 billion dollars.