If you are going to write an editorial on the endowment fund and on the stock market (Endowment losses are cause for serious concern SN 10/22), could you at least have someone who has a decent knowledge of finances, the stock market and proper investment strategy write it?
It is the nature of the market to be very volatile in the short run, but in the long run the stock market is actually the best hedge against inflation out there. Just doing some simple math, we can there was only a 10 percent drop in the endowment fund — versus a 30 to 40 percent drop in the Dow Jones Industrial Average — which indicates the majority of the university’s endowment fund is already in more of the short-term bond and CD investments the author recommends. What exactly is the problem with keeping 40 to 50 percent of an investment portfolio in the stock market, which has historically had much higher returns (10 to 11 percent on average for a broad market index) than any other investment options? How can someone live in the U.S. and be that skeptical of American industry to think that there is anything unstable about the market in the long run? Is the author waiting for the apocalypse or what?
