There is a fascinating post at DealBook by Steven Davidoff that takes a peek behind the curtain of high finance in higher education, using the Harvard University endowment as an illustration. An excerpt:
So, my numbers are rough, very rough estimates — but the problem is apparent. In the short term, unless it boosts its liquid returns, Harvard is going to have to raise a lot in donations or eat up its liquid assets to fund university obligations and its private equity commitments. This results in a spiraling decline in Harvard’s liquid assets as each year they go lower to meet these needs and more and more assets become tied up in private equity. This assumes the markets stay where they are in the next three years — there are scenarios where liquid assets do worse (like yesterday), or better, of course.
Read the whole thing.
one prob
Harvard has a lot different set of problems than a typical organization, so I don't think you can use Harvard as an illustration for all of higher ed.
This shows that low interest rates, or 0% interest rates, create another set of problems. People living on interest income get pinched. It can be hard on organizations that rely on interest income, or that made promises\guarantees (insurance companies) when interest rates were higher.
Each investment strategy has
Each investment strategy has its time to shine and right now liquidity and transparency are key. The problems of Harvard are the problems of many. This is why you are seeing a move towards programs with greater liquidity and managers have realized that they are going to have to be less secretive if they want to gather assets. Start up hedge fund managers should take note, see http://www.hedgefundlawblog.com/hedge-fund-start-up-presentation.html
No long term investors
Without the market reforms discussed in this article (reinstatement of uptick rule, closing loopholes to illegal naked shorting, regulation of hedge funds, regulation of credit default swap market) the markets will be limited to short term trading only. The corruption and manipulation have made them little more than casinos where the odds are stacked heavily in favor of "the house".
The investing public will not be back in the markets until safeguards are implemented.
The investment banking community somehow thinks they can lure investors back with honeyed words and the usual deceptions. It won't work this time . . . people have been seriously burned, and most won't be back for more abuse . . . they are headed for divorce court.
http://techstock2000.wordpress.com/2009/03/07/time-to-stop-talking-and-s...
YES!!!! Uptick rule coming back
Frank says it will be back in a month. Schapiro is on board with it.
Yes, yes, yes! I've been ranting about this for a year now . . . repeal under Cox's SEC was a criminal act -- he abetted in destroying our markets.
I'll think about putting money back into the markets now . . . let's see if more regulation to protect and safeguard our markets is forthcoming . . . the small investor got screwed by Cox and his no-account SEC.
The previous administration should be prosecuted for the way they colluded with the Wall Street criminals.