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Feb 4, 2010 12:20 pm

I used to be a big Swenson fan before I found out he did little to nothing in terms of actuall management. He and his assts just farm out 80% of the investments(of course there is some due diligence in that but not nearly the same as actually managing it) might be why he was down so bad.

Feb 4, 2010 1:07 pm
Squash1:

Agree… Swenson farms out most of the money…He manages very little…

  Not being a Swenson groupie i don't know exactly what he does. However, farming out the management makes him no better than a ML rookie advisor and neatly explains the ML rookie like results.
Feb 4, 2010 1:15 pm

Okay gentlemen, you guys should really read a bit more about the Yale Endowment.  He does not “farm out” 80% of the work.  Most is done “in house”.

  The big decline came from private equity.  PE is illiquid, so the losses are only paper losses for now.   Honestly BondGuy, I can't believe you of all people, with this many years in the business, would judge a manager on only 1 years performance.  Forgetting entirely the prior 25 years of top notch performance.   Running an endowment is much different than running portfolios for clients.  Endowments have no time horizon.  They exist in perpetuity, so they are able to take on larger risks.  The funny thing is is that PE firms like Blackstone often drastically outperform in years after a recession.
Feb 4, 2010 1:45 pm

First off, most endowments “farm out” the actual management.  However, their role is to make the tactical decisions for the endowment, and they spend the majority of their time doing research on managers and the economy, not on whether to buy Pepsi or Coke.

  I suppose Warren Buffett's a chump too.  From Sept 2008 to March 2009 he lost 46%.  He just buys big companies, he doesn't actually manage them.
Feb 4, 2010 2:13 pm

[quote=B24]First off, most endowments “farm out” the actual management.  However, their role is to make the tactical decisions for the endowment, and they spend the majority of their time doing research on managers and the economy, not on whether to buy Pepsi or Coke.

  I suppose Warren Buffett's a chump too.  From Sept 2008 to March 2009 he lost 46%.  He just buys big companies, he doesn't actually manage them.[/quote] I do think Warren is overrated... But in your example the comparison aren't equal...   Buffett is buying companies, Swensen is farming out Investments... totally different... Buffet can effect change in a company, fire employees, raise/lower salaries/benefits, decrease operations etc... all Swensen can do is give more money or take it away..
Feb 4, 2010 2:19 pm

[quote=Squash1][quote=B24]First off, most endowments “farm out” the actual management.  However, their role is to make the tactical decisions for the endowment, and they spend the majority of their time doing research on managers and the economy, not on whether to buy Pepsi or Coke.

  I suppose Warren Buffett's a chump too.  From Sept 2008 to March 2009 he lost 46%.  He just buys big companies, he doesn't actually manage them.[/quote] I do think Warren is overrated... But in your example the comparison aren't equal...   Buffett is buying companies, Swensen is farming out Investments... totally different... Buffet can effect change in a company, fire employees, raise/lower salaries/benefits, decrease operations etc... all Swensen can do is give more money or take it away..[/quote]

I think Buffett is awesome, but I think you're right. People talk about his investments in companies like GE like he is buying common stock or something. There is nothing brilliant about using the leverage of having cash to demand at least a 10% return on your money.
Feb 4, 2010 2:24 pm

[quote=B24]First off, most endowments “farm out” the actual management.  However, their role is to make the tactical decisions for the endowment, and they spend the majority of their time doing research on managers and the economy, not on whether to buy Pepsi or Coke.

  I suppose Warren Buffett's a chump too.  From Sept 2008 to March 2009 he lost 46%.  He just buys big companies, he doesn't actually manage them.[/quote] Look at the 13F... where are all the assets?
Feb 4, 2010 3:08 pm

Rainwater is way better then Swensen… So is that guy from Renasaince Tech(although he just uses math formulas so he cheats)…

Feb 4, 2010 3:15 pm

[quote=Squash1]Rainwater is way better then Swensen… So is that guy from Renasaince Tech(although he just uses math formulas so he cheats)… [/quote]


Feb 4, 2010 4:05 pm

James Simons… I think his ideas are unrepeatable(as evidence from the fact that he can’t repeat the performance of his Medallion Fund)…

Feb 4, 2010 4:17 pm

[quote=etj4588]Okay gentlemen, you guys should really read a bit more about the Yale Endowment.  He does not “farm out” 80% of the work.  Most is done “in house”.

  The big decline came from private equity.  PE is illiquid, so the losses are only paper losses for now.   Honestly BondGuy, I can't believe you of all people, with this many years in the business, would judge a manager on only 1 years performance.  Forgetting entirely the prior 25 years of top notch performance.   Running an endowment is much different than running portfolios for clients.  Endowments have no time horizon.  They exist in perpetuity, so they are able to take on larger risks.  The funny thing is is that PE firms like Blackstone often drastically outperform in years after a recession.[/quote]   He ran 1 bil to 16 bil in round numbers. Then gives up 30% of that in a few months? My dog was an investment genius from 88 to 2000. I had him pee on the stock page. What is there to be impressed with?
Feb 4, 2010 4:20 pm

[quote=BondGuy] 

He ran 1 bil to 16 bil in round numbers. Then gives up 30% of that in a few months? My dog was an investment genius from 88 to 2000. I had him pee on the stock page. What is there to be impressed with?[/quote]   You're right.  Enough said.  Wow.
Feb 4, 2010 4:20 pm

[quote=B24]First off, most endowments “farm out” the actual management.  However, their role is to make the tactical decisions for the endowment, and they spend the majority of their time doing research on managers and the economy, not on whether to buy Pepsi or Coke.

  I suppose Warren Buffett's a chump too.  From Sept 2008 to March 2009 he lost 46%.  He just buys big companies, he doesn't actually manage them.[/quote]   Buffett's Ok, wrong, but Ok. And, he can still retire on 46% less assets.  Tactically, Swenson was very overpaid. Big pic, he missed what was going on.
Feb 4, 2010 5:25 pm

[quote=iceco1d]Bondguy, you really hate anything related to MPT, don’t you?  Efficient markets, asset allocation, all hogwash in your opinion I gather?

  Now mind you, I mean implemented the way they are SUPPOSED to be implemented, not in the way they are implemented by buying an American Funds asset allocation fund or a Fidelity Target Date fund....   In other news, I'm going to be down your way (I think) this weekend...want to grab a drink?  [/quote]   Actually i have great respect for those who have developed the foundation for modern investing. Alfred Cowles is one I hold in very high esteem.   As for MPT/efficient frontier/asset allocation/buy and hold- which of these together or seperately protected clients from aug 08 to mar 09?   The answer is none.   The financial advisory biz is buy side biased. Fin advisors don't get paid to sit on the side lines. They get paid to invest the money. Thus clients were left sitting squarely on the tracks when the 902 to financial destruction ran them down. Why didn't MPT pull these investors from the path of destruction? Because it doesn't work, that's why.   MPT is a means to an end. The Financial advisory business wanted a scalable business. The fee acct was the answer. Just add assets and watch your revenues grow! MPT is the "story", the reason investors needed to go fee. It is the key part of the "Pitch."   Add the failure to protect to the less than zero 10 year return of the benchmark portfolio anchoring S&P500 index found in most accts and ask, in who's best interest is MPT? Just who is it working for? If you answered "millions of investors", congratulations you qualify to be ML's next Private Client Group head. If you answered honestly, the firms collecting billions in revenues as their clients lose access to a secure retirement, you understand my pain.  
Feb 5, 2010 8:37 pm

So BG, your clients didn’t lose a dime during the crises?

Feb 11, 2010 5:39 am

Its a good to be here every one. Blow your mind well and getting much bater.
Hows that and feel it well.

Have a well time.