DOCSLIB.ORG

Jack-D.-Schwager-Market-Wizards-Interviews-With-Top-Traders-Marketplace-Books-2006.Pdf

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Jack-D.-Schwager-Market-Wizards-Interviews-With-Top-Traders-Marketplace-Books-2006.Pdf MARKET WIZARDS Interviews with Top Traders JackD. Schwager HarperBusiness A Division of HarperCoWinsPubltshers learn to You've to learn how to fall,beforeyou fly. got Contents \342\200\224PaulSimon One man's ceiling is another man's floor. \342\200\224PaulSimon Preface, ix If I wanted to become a tramp, I would seek information and advice from the mostsuccessful I could find. If I wanted tramp Acknowledgments, xi to becomea failure,I would seek advice from men who had neversucceeded.If I wanted to succeed in all things, I would Prologue, xiii lookaround me for those who are succeeding and doas they have done. Marshall Own xv \342\200\224Joseph Wade My Story, Wall Street Wisdom (as quoted in a Treasuryof edited by Harry D.Schultzand SamsonCoslow) PART I FUTURES AND CURRENCIES Out 3 TakingtheMystery of Futures, The Interbank Currency Market Defined,7 Michael Marcus: Blighting Never Strikes Twice,9 Bruce Kovner:The World Trader, 51 Richard Dennis: A Legend Retires, 85 Contents vii vi Contents PART III A LITTLE BIT OF EVERYTHING Paul Tudor Jones: The Art of Aggressive Trading, 117 Yes, They Do Trade T-Bonds Gary Bielfeldt: James B. Rogers, Jr.: Buying Value and Selling in 141 Peoria, Hysteria, 283 Ed GetsWhat Want, 151 Seykota:Everybody They Mark Weinstein: High-PercentageTrader,321 Larry Hite: Respecting Risk,175 PARTIV THE VIEW FROM THE FLOOR PARTII MOSTLY STOCKS Brian Gelber: BrokerTurned Trader, 345 Tom Baldwin: The Fearless Pit Trader,367 Michael Steinhardt: The Concept of Variant Perception, 193 TonySaliba:\"One-Lot\" Triumphs, 387 William O'Neil: The AH of StockSelection,219 PART V THE PSYCHOLOGY OF TRADING DavidRyan:Stock Investment as a Treasure Hunt, 23? Dr. Van K. The 257 Tharp: Psychology of Trading, 411 Marty Schwartz: Champion Trader, The Trade: A Personal Experience, 431 Postscript: Dreams and Trading,437 Final Word,439 Preface and Appendix1:Program Trading Portfolio Insurance, 441 There are some amazing stories here: the 443 Appendix 2: Options\342\200\224Understanding Basics, \342\200\242A trader who, after wiping out several times early in his career, turned a $30,000 accountinto $80 million 447 Glossary, \342\200\242 A fund manager who achieved what many thought impossible\342\200\224fiveconsecutive years of triple-digit percentage returns \342\200\242A trader from small-town America who started out on a shoestring and has become one of the world's largestbond traders \342\200\242A former securities analyst who, during the past seven years, has realized an average monthly return of 25 percent (over 1,400percentannualized), primarily trading stock index futures \342\200\242An electrical engineering graduate from MTTwhose largely computerized approach to trading has earnedhis accounts an astounding 250,000 percent return over a sixteen-year period These are but a sampling of the interviews contained in this book. In his own way, each of the traders interviewed has achieved incredible success. What sets these traders apart?Mostpeoplethink that winning in the markets has something to do with finding the secret formula. The truth is that any common denominator among the traders I interviewed had more to do with attitude than approach. Some of the tradersuse fundamental analysis exclusively, others employ only technical analysis, and still others combinethe two. Some traders operate on a time horizon measured in hours or even minutes, while others typically implement X Preface that intend to hold for months positions they or evenyears.Although the trading methodologies varied widely, the forthcoming interviews reveal certainimportant commonalities in trading attitudes and principles. one of the last Trading provides great frontiers of opportunity in our economy. It is one of the very few ways in which an individual can start with a relatively small bankroll and actually become a Acknowledgments multimillionaire. Of course, only a handful of individuals (such as those interviewed here) succeed in this but at turning feat, least the opportunity exists. While I all of this book hardly expect readers to transform First and foremost, I would like to thank Stephen Chronowitz, who pored themselves into super-traders\342\200\224the world doesn't work that of just way\342\200\224I over everychapter in this book and provided a multitude helpful believe that these interviews will most to thought-provoking help serious suggestions and editing changes. I am indebted Steve for both the and readers their I open-minded improve personal trading performance. quantity (hours) and quality of his input. truly believe that whatever the It may even a select few help becomesuper-traders. merits of this work, it has benefited significantly from his contributions. I am grateful to my wife, Jo Ann, not only for enduring nine months \"book but valuable board\342\200\224arole JackD. Schwager as a widow,\" also for being a sounding Goldens Bridge, NY she performed with brutal honesty. Sample:\"This is the worst thing you May 1989 ever wrote!\"(Needlessto say, that item was excised from the book.) Jo Ann possesses commonsensein abundance, and I usually followed her adviceunquestioningly. Of course, I would like to expressmy thanks to all the traders who agreed to be interviewed, without whom there would be no book. By and large,thesetraders neither need nor seek publicity, as they trade only for wish to. their own accounts or are already managing all the money they In many cases, their motives for participating were altruistic. For example, as one trader expressed it, \"When I was starting out, I found biographies and interviews of successful tradersparticularly helpful, and I would like to play a similar role in helping new traders.\" I wish to express my sincere appreciation to ElaineCrockerfor her friendly persuasion, which made someof the chapters in this book possible. For advice, leads, and other assorted favors,I would like to thank Courtney Smith, Norm Zadeh, Susan Abbott, Bruce Babcock, Martin Presler, Chuck Carlson, Leigh Stevens, Brian Gelber,MichaelMarcus, and William Rafter. Finally, I would like to thank three traders who were gracious enough to grant me lengthy interviews, which were not and Martin incorporated into this book: Irv Kessler, DougRedmond, Presler (the former two because, in retrospect, I considered my line of question- *\" Acknowledgments ing too esoteric and technical; the latter because publication deadlines did not time for permit needed follow-up interviews and editing). Prologue The name of the book was The BigBoard. It was about an Earth- ling man and woman who were kidnapped by extraterrestrials. They were put on display in a zoo on a planet called Zircon-212. These fictitious people in the zoo had a big board supposedly showing stock market quotations and commodity prices along one wall of their habitat, and a news ticker, and a telephone that was supposedly connected to a brokerage on Earth. The creatures on Zircon-212 told their captives that they had invested a million dollars for them back on Earth, and that it was up to the captives to manage it so that they would be fabulously wealthy when they were returned to Earth. The telephone and the big board and the ticker wereallfakes,of course. They were simply stimulants to make the Earthlings perform vividly for the crowds at the zoo\342\200\224tomake them jump up and down and cheer, or gloat, or sulk, or tear their hair, to be scared shitless or to feel as contented as babies in their mothers' arms. The Earthlings did very well on paper. That was part of the rigging, of course. And religion got mixed up in it, too. Thenews ticker reminded them that the President of the United States had declared National Prayer Week, and that everybody should pray. The Earthlings had had a bad week on the market before that. They had lost a small fortune in olive oil futures. So they gave praying a whirl. It worked. Oliveoilwent up. \342\200\224KurtVonnegut Jr. Slaughterhouse Five If the random walk theorists are correct, then Earthbound traders are suffering from the same delusions as the zoo inhabitants of Kilgore Trout's novel. (Kilgore Trout is the ubiquitous science fiction writer in Kurt Vonnegut's novels.) Whereas the prisoners on Zircon-212 thought their decisions were being based on actual price quotes\342\200\224they were not\342\200\224real- life traders believe they can beat the market by their acumen or skill. If xiv Prologue markets are truly efficient and random in every time span, then these traders are attributing their success or failure to their own skills or shortcomings, when in reality it is all a matter of luck. After interviewing the traders for this book, it is hard to believe this view of the world. One comes away with a strong belief that it is highlyunlikely that some traders can win with such consistency over vast numbers of trades and Own many years. Of course, given enough traders, My Story some will come out after a ahead even long period of time, simply as a consequence of the laws of probability. I leave it for the mathematicians to of determine the odds traders winning by the magnitude and duration that out of I as a research those interviewed here have. Incidentally, the traders themselves Right graduate school, landeda job commodity to have not a glimmer of doubt that, over the the of who analyst. I was pleasantly surprised find that my economic and long run, question wins and who statistical a number of loses is determined by skill, not luck. I, too, share this analysis correctly predicted major commodity price conviction. moves. It was not long thereafter that the thought of trading came to mind. The only problem was that my department generallydid not permit analysts to trade.
Load more

Recommended publications
  • Endowments and Funds As of June 30, 2010
    2009-2010 Contributors E ND O W M E N TS A ND FUNDS Many donors choose to establish named endowments or funds, which provide critical support for productions and projects in general or specific program areas. They also offer special recognition opportunities. The following is a list of named endowments and funds as of June 30, 2010. The Vincent Astor Endowment for Literacy Programming The Arlene and Milton D. Berkman Philanthropic Fund Lillian and H. Huber Boscowitz Arts and Humanities Endowment The Aron Bromberg / Abe Raskin Partners Fund Irving Caesar Lifetime Trust for Music Programming The Joanne Toor Cummings Endowment for Children’s Programming FJC – A Foundation of Philanthropic Funds The Rita and Herbert Z. Gold Fund for Children’s Programming The Lillian Goldman Programming Endowment The M.J. Harrison/Rutgers University Broadcast Fellowship Program The Robert and Harriet Heilbrunn Programming Endowment The JLS/RAS Foundation Endowed Income Fund The John Daghlian Kazanjian Endowment The Anna-Maria and Stephen Kellen Arts Fund The Bernard Kiefson Endowment for Nature Programming The Reginald F. Lewis Endowment for Minority Fellowship Programs The Frits and Rita Markus Endowment for Science and Nature Programming The Abby R. Mauzé Endowment Fund for Arts and Humanities Programming The George Leonard Mitchell Fund The Henry and Lucy Moses Endowment for Children’s Programming The Abby and George O’Neill Program Endowment Fund The George Page Endowment for Science and Nature Programming The Dr. Edward A. Raymond Endowment for Science and Nature Programming Dr. Helen Rehr Endowment for Education and Outreach Blanchette Hooker Rockefeller Fund Endowment for Humanities Programming May and Samuel Rudin Family Foundation Minority Fellowship Program The Dorothy Schiff Endowment for News and Public Affairs Programming The Hubert J.
    [Show full text]
  • Michael Steinhardt's 1991 Corner of the U.S. Treasury Market
    Click here for Full Issue of EIR Volume 29, Number 30, August 9, 2002 nightmare of today’s. Some 40% of Brazil’s trillion-dollar domestic public debt is now dollarized. That means that every time the real devalues, Brazil’s debt increases. By Bloomberg News Service’s calculation, every percentage Michael Steinhardt’s point devaluation increases Brazil’s government debt by $1.4 billion. To see the absurdity of the situation, consider 1991 Corner of the that on July 29 alone, the run on the real due to panic about Brazil’s ability to pay its debt, increased Brazil’s debt by a whopping $7.56 billion, without the country receiving a U.S. Treasury Market single loan. by Richard Freeman Capital Controls Now! In this situation, the fixation on getting another $10-20 In 1991, Michael Steinhardt, in coordination with Salomon billion in new money from the IMF is ludicrous. It cannot Brothers, conducted one of the biggest corners of the U.S. solve the problem, even temporarily. And, given the IMF’s Treasury market in U.S. history, turning America’s sovereign conditionality, that all the candidates in the October 2002 debt into a speculative plaything. It was an attack on the sover- Presidential race sign on to any agreement the Cardoso gov- eignty of the United States. ernment might reach with the IMF, a new bailout is not likely Steinhardt is the son of the notorious Sol “Red” Stein- to come quickly, if at all. hardt, a leading figure in the Meyer Lanksy National Crime Brazil’s debt is unpayable, and everyone in the know, Syndicate (see “The Real Scandal: McCain and Lieberman,” knows this, and is planning accordingly.
    [Show full text]
  • The Watershed Events of 2000
    CCC-Peltz 1 (1-44) 3/12/01 6:47 PM Page 13 1 THE WATERSHED EVENTS OF 2000 Julian Robertson of Tiger Manage- ment and George Soros of Soros Fund Management had long been rec- ognized as the great hedge fund managers. For many years, Soros had been the largest hedge fund manager as determined by assets under management; but in 1998, Robertson’s assets overtook Soros’s. At their peaks, both had assets of about $22 billion. Both men had long and successful track records. Soros started his fund in 1969 and Robertson in 1980. Both evolved into global macro managers—those managers who take advantage of opportunities around the world and invest in a variety of instruments including stocks, bonds, commodities, currencies, and futures, and typically take large leveraged positions. By midyear 2000, the situation had changed drastically. Robertson had retired and Soros had significantly changed his organization and fund objectives. TIGER UNRAVELS I met Julian H. Robertson Jr. for the first time in August 1998. We had breakfast in his office on the top floor of 101 Park Avenue. He fit the image of the Southern gentleman that I had heard about so often. Dur- ing the breakfast, he mentioned the problems that he had with Business 13 CCC-Peltz 1 (1-44) 3/12/01 6:47 PM Page 14 14 THE NEW INVESTMENT SUPERSTARS Week. (Business Week wrote an April 1996 cover piece on him called “The Fall of the Wizard of Wall Street.” It focused on his results in 1994 and 1995. The following March, Robertson initiated a libel lawsuit in New York State courts against Business Week; McGraw-Hill, the pub- lisher of the magazine; Gary Weiss, the author of the story; and Stephen Shepherd, the editor of Business Week, seeking to recover $1 billion in damages.
    [Show full text]
  • UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT of NEW YORK SECURITIES INVESTOR PROTECTION CORPORATION, Adv
    09-01182-smb Doc 294 Filed 11/25/15 Entered 11/25/15 13:10:48 Main Document Pg 1 of 7 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK SECURITIES INVESTOR PROTECTION CORPORATION, Adv. Pro. No. 08-01789 (SMB) Plaintiff-Applicant, SIPA LIQUIDATION v. (Substantively Consolidated) BERNARD L. MADOFF INVESTMENT SECURITIES LLC, Defendant. In re: BERNARD L. MADOFF Debtor, IRVING H. PICARD, Trustee for the Liquidation of Adv. Pro. No. 09-1182 (SMB) Bernard L. Madoff Investment Securities LLC, Plaintiff, v. J. EZRA MERKIN, GABRIEL CAPITAL, L.P., ARIEL FUND LTD., ASCOT PARTNERS, L.P., GABRIEL CAPITAL CORPORATION, Defendants. DECLARATION OF DR. STEVE POMERANTZ 09-01182-smb Doc 294 Filed 11/25/15 Entered 11/25/15 13:10:48 Main Document Pg 2 of 7 I, Steve Pomerantz, hereby declare, under penalty of perjury: 1. I am president of Steve Pomerantz LLC, an economic and financial consulting firm located in New York, NY, where I provide economic and investment management consulting, economic damage assessment and litigation support. 2. I was retained in this matter by Irving H. Picard, Trustee (“Trustee”) for the substantively consolidated liquidation of Bernard L. Madoff Investment Securities LLC (“BLMIS”) under the Securities Investor Protection Act (“SIPA”), 15 U.S.C. §§ 78aaa et seq., and the estate of Bernard L. Madoff (“Madoff”) and by Baker & Hostetler, LLP (“Baker”), counsel for the Trustee.1 Attached as Exhibit 1 is a true and correct copy of my Initial Expert Report and certain appendices dated March 20, 2015, and submitted to Defendants on or about March 20, 2015 (and a corrected version submitted on April 13, 2015) (the “Expert Report”).2 Attached as Exhibit 9(a) to the Declaration of Neil A.
    [Show full text]
  • The Neocon,The Messiah, and Cory Booker
    THE NEOCON, THE MESSIAH, AN D CORY BOOKER NSFW6_B-Side_v3ge.indd 3 8/29/13 9:07 AM “ The difference between a Jewish and a non-Jewish person stems from the common expression: ‘Let us differentiate’ …between totally different species.” —The Chabad-Lubavitcher Rebbe BY YASHA in its ranks. In the early 1990s, my grandparents, and nurture them Chabad’s passive-aggressive racism in a way that allowed those seeds to LEVINE helped trigger a three-day race riot in #ourish and blossom into the kind of Brooklyn. Earlier this year, a prominent work to which I have dedicated my life. Cory Booker, the Democratic Chabad rabbi mocked victims of “Right now, I am on the streets of candidate for New Jersey Senator, childhood sexual abuse who went Newark, battling what I think is one has been endorsed by the New York public, comparing their sexual abuse to of the most important battles in the Times as the next progressive hope…a “diarrhea” which is “embarrassing but city, in this nation, to try to make the younger, more populist version of Barack it’s nobody’s business.” spirit of God alive and well. As one Obama, a guy who’s not afraid to get Booker’s relationship with the sect of my rabbi friends told me—to try to down and dirty. !e Times’ op-ed goes back to the early ’90s, when he truly bring about, through e$ort and wizards described Booker as a “deeply became an active member of Chabad sweat, or whatever necessary—the unconventional politician,” known for out"ts at Oxford and Yale.
    [Show full text]
  • Famous Traders Quotes
    Famous Traders Quotes “There is another old saying: “you can never go broke taking a profit.” The Turtles would not agree with this statement. Getting out of winning positions too early, i.e. “taking a profit” too early, is one of the most common mistakes when trading trend following systems.” “Prices never go straight up; therefore it is necessary to let the prices go against you if you are going to ride a trend. Early in a trend this can often mean watching decent profits of 10% to 30% fade to a small loss. In the middle of a trend, it might mean watching a profit of 80% to 100% drop by 30% to 40%. The temptation to lighten the position to “lock in profits” can be very great.” Good investing is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake. -Michael Steinhardt I advise you to always use stops. I mean actually put them in, because that commits you to get out at a certain point. Another thing is that if a position doesn't feel right as soon as you put it on, don't be embarrassed to change your mind and get right out. -Michael Marcus I think the leading cause of financial disablement is the belief that you can rely on the experts to help you. Investing requires an intense personal involvement. -Michael Marcus Fundamentalists who say they are not going to pay any attention to the charts are like a doctor who says he’s not going to take a patient’s temperature.
    [Show full text]
  • The New Investment Superstars
    The New Investment Superstars 13 Great Investors and Their Strategies for Superior Returns by Lois Peltz John Wiley & Sons, Inc. © 2001 286 pages Focus Take-Aways Leadership • The established gentlemen of hedge fund investing are gradually giving way to a Strategy new breed of fund managers with different characteristics. Sales & Marketing Corporate Finance • The new fund managers are more concerned with delivering superior performance under varying market conditions than with amassing huge assets. Human Resources Technology • The new managers employ a more team-oriented style of decision making. Production & Logistics • Many superstar managers use investment committees to evaluate opportunities. Small Business • The new managers seek to institutionalize their endeavors and install succession Economics & Politics plans. Industries & Regions Career Development • It remains to be seen how many brilliant bulls will turn into embarrassed bears. Personal Finance • Sheer size of a fund is considered a potential liability, rather than an objective. Self Improvement • Many managers diversify by giving money to other fund managers to invest. Ideas & Trends • Numerous types of hedge funds are available, but superstar hedge fund managers tend to have common characteristics. • There are now 4,500 to 6,500 hedge funds with assets of $350 billion to $450 billion. Rating (10 is best) Overall Applicability Innovation Style 7 6 7 8 V i s i t o u r we b s i t e a t w w w. g e t A b s t r a c t .c o m t o p u r c h a s e i n d i v i d u a l a b s t r a c t s , p e r s o n a l s u b s c r i p t i o n s o r c o r p o r a t e s o l u t i o n s .
    [Show full text]
  • No Bull: My Life in and out of Markets Michael Steinhardt
    To purchase this product, please visit https://www.wiley.com/en-bb/9780471660460 No Bull: My Life In and Out of Markets Michael Steinhardt Paperback 978-0-471-66046-0 December 2004 Print-on- $22.95 demand DESCRIPTION When the official history of twentieth-century Wall Street is written, it will certainly contain more than a few pages on Michael Steinhardt. One of the most successful money managers in the history of "The Street," Steinhardt far outshone his peers by achieving an average annual return of over thirty percent-significantly greater than that of every market benchmark. During his almost thirty-year tenure as a hedge fund manager, he amassed vast wealth for his investors and himself. One dollar invested with Steinhardt Partners L.P., his flagship hedge fund, at its inception in 1967 would have been worth $462 when he retired from active money management in 1995. No Bull offers an account of some of the investment strategies that drove Michael Steinhardt's historic success as a hedge fund manager including a focus on his skills as an industry analyst and consummate stock picker. He also reveals how his uncanny talent for knowing when to trade against the prevailing market trend-a talent that was not always appreciated by several erstwhile high- profile clients-resulted in many of his greatest successes. Here he provides detailed accounts of some of his most sensational coups- including his momentous decision, in 1981, to stake everything on bonds-and his equally sensational failures, such as his disastrous foray into global macro-trading in the mid-1990s.
    [Show full text]
  • Educational Endowments and the Financial Crisis: Social Costs and Systemic Risks in the Shadow Banking System a Study of Six New England Schools
    EDUCATIONAL ENDOWMENTS AND THE FINANCIAL CRISIS: SOCIAL COSTS AND SYSTEMIC RISKS IN THE SHADOW BANKING SYSTEM A STUDY OF SIX NEW ENGLAND SCHOOLS CENTER FOR SOCIAL PHILANTHROPY TELLUS INSTITUTE 11 Arlington Street Boston, Massachusetts 02116 617.266.5400 $ $ Executive Summary Educational Endowments and the Financial Crisis: Social Costs and Systemic Risks in the Shadow Banking System A Study of Six New England Schools Over the last two decades, wealthy colleges and universities placed an increasing share of their endowments into high-risk, high-return, largely illiquid investments. During the boom times, this so- called “Endowment Model of Investing” generated impressive financial returns. Then came the financial crisis, and in the space of a year, investment losses destroyed tens of billions in endowed wealth at colleges and universities, up to 30 percent of endowment value at some of the wealthiest schools. Mounting endowment losses have been used by college administrations to justify some of the severest austerity measures in a quarter-century: deep budget cuts, diminished endowment payouts, staff layoffs, and other substantial reductions in force and benefits. The hardship caused by these measures has rippled out in the form of lasting job loss, stalled construction projects, and local business downturns in college communities that used to be secure havens of regional employment and economic resilience. How did universities, once careful stewards of endowment income, get caught up in the Wall Street-driven financial meltdown? Did our higher education institutions, like America’s big banks and financial companies, take ill-advised risks chasing speculative returns? Educational Endowments and the Financial Crisis: Social Costs and Systemic Risks in the Shadow Banking System looks at what happens—and who suffers—when universities embrace high-risk investing.
    [Show full text]
  • The Jewish Phenomenon Bridges
    Seven Keys to the Enduring Wealth of a People Revised Edition Steven Silbiger Acknowledgments ix Introduction 1 I Understand That Real Wealth Is Portable; It's Knowledge 21 2 Take Care of Your Own and They Will Take Care of You 35 3 Successful People Are Professionals and Entrepreneurs 53 4 Develop Your Verbal Confidence 87 5 Be Selectively Extravagant but Prudently Frugal 107 6 Celebrate Individuality: Encourage Creativity 127 7 Have Something to Prove: A Drive to Succeed 157 Appendix 1: Yiddish: "Can't Spell It, Can't Pronounce It, and Don't Get it" 175 Appendix 2: Hebrew: Fifty Helpful Vocabulary Words 191 Appendix 3: Ten Yiddish Proverbs 195 Appendix 4: The Jewish Calendar and Jewish Holidays 197 Notes 201 Humor Sources 209 Index 211 Ywould like to thank John Yow, my editor at Longstreet Press, who immediately saw the potential of the project and made invaluable contributions to the book. I would also like to thank my editors who provided me a greater sensitivity and perspective: John Braun, Helen Gioulis and Rachel Silbiger, my mom. Comments, questions? E-mail the author at [email protected]. JJteven Spielberg. Ralph Lauren. Sergey Brin. Michael Dell. They're all successful, at the top of their fields. They're all fabulously wealthy. And they're all Jewish. Those three characteristics-successful, wealthy and Jewish-are linked repeatedly in America today. And it is no accident. Jewish Americans are, as a group, the wealthiest ethnic group in America. But the factors that work together to create Jewish wealth, which I identify in this book, can be applied to individuals and groups from any background.
    [Show full text]
  • University Endowments and the Financial Crisis
    EDUCATIONAL ENDOWMENTS AND THE FINANCIAL CRISIS: SOCIAL COSTS AND SYSTEMIC RISKS IN THE SHADOW BANKING SYSTEM A STUDY OF SIX NEW ENGLAND SCHOOLS CENTER FOR SOCIAL PHILANTHROPY TELLUS INSTITUTE 11 Arlington Street Boston, Massachusetts 02116 617.266.5400 ! $ $ Executive!Summary! Educational!Endowments!and!the!Financial!Crisis:! Social!Costs!and!Systemic!Risks!in!the!Shadow!Banking!System! ! "!#$%&'!()!#*+!,-.!/01230&!#45((26! Over the last two decades, wealthy colleges and universities placed an increasing share of their endowments into high-risk, high-return, largely illiquid investments. During the boom times, this so- called “Endowment Model of Investing” generated impressive financial returns. Then came the financial crisis, and in the space of a year, investment losses destroyed tens of billions in endowed wealth at colleges and universities, up to 30 percent of endowment value at some of the wealthiest schools. Mounting endowment losses have been used by college administrations to justify some of the severest austerity measures in a quarter-century: deep budget cuts, diminished endowment payouts, staff layoffs, and other substantial reductions in force and benefits. The hardship caused by these measures has rippled out in the form of lasting job loss, stalled construction projects, and local business downturns in college communities that used to be secure havens of regional employment and economic resilience. How did universities, once careful stewards of endowment income, get caught up in the Wall Street-driven financial meltdown? Did our higher education institutions, like America’s big banks and financial companies, take ill-advised risks chasing speculative returns? Educational Endowments and the Financial Crisis: Social Costs and Systemic Risks in the Shadow Banking System looks at what happens—and who suffers—when universities embrace high-risk investing.
    [Show full text]
  • The Money Management Gospel of Yale's Endowment Guru
    The Money Management Gospel of Yale’s Endowment Guru - T... http://www.nytimes.com/2016/11/06/business/the-money-man... http://nyti.ms/2eaLzsP BUSINESS DAY The Money Management Gospel of Yale’s Endowment Guru By GERALDINE FABRIKANT NOV. 5, 2016 As he has done for decades, once a week David F. Swensen convenes his staff — including his cadre of apprentices — for a morning-long meeting among the Gothic revival flourishes and crenelations of the Yale University campus to debate investment ideas. Mr. Swensen, 62, runs the school’s $25.4 billion endowment, one of the largest in the country. Usually he is joined by his intellectual sparring partner, Dean Takahashi, his senior director. It amounts to an internship in the world of managing a university’s billions — and the young analysts have a front-row seat. “It was like watching a 70-year-old married couple go at it in full force,” recalled Andrew Golden, who was one of those Swensen acolytes in the 1980s. But forget what you think about internships and fetching doughnuts for the bosses. The meetings are supposed to be a crucible of ideas, and the analysts — some of whom stay in the positions for years — recalled bringing their own proposals in the early days, and having to defend them or face the music. “It could be jarring to have your own view shredded by them,” Mr. Golden said. As for Mr. Swensen, it’s an environment that brings together two things he loves: 1 of 9 11/30/16, 3:19 PM The Money Management Gospel of Yale’s Endowment Guru - T..
    [Show full text]