Skip to comments.Harvard's losses tied to cash decision [$2B loss]
Posted on 10/17/2009 4:02:09 AM PDT by Daffynition
Harvard University last year lost nearly $2 billion in the cash account it uses to pay for daily operations, by investing the money with its endowment fund instead of keeping it in safer, bank-like accounts.
The loss, disclosed today in the university's annual financial report, resulted from Harvard financial executives taking the unusual step of placing a large mount of the university's cash with Harvard Management Co., the entity that runs the school's endowment and invests in stocks, hedge funds and other risky assets.
Typically, companies and institutions manage their cash accounts conservatively in order to have funds readily available, by keeping that money in bank-like accounts and other low-risk investments such as money-market mutual funds.
Harvard, however, said it lets its endowment managers invest the cash in order to get higher returns, a move that paid off in previous years when the stock market was rising, said the university's chief financial officer, Daniel S. Shore. But that turned out to be a disaster when the financial markets collapsed last year, causing huge investment losses. The $26 billion endowment reported a 27 percent loss for its last fiscal year.
Shore would not say exactly how much cash the university had with Harvard Management last year, but it was more than in prior years, he said.
"We were invested fairly heavily with them and that's what led to the losses,'' Shore said in a Globe interview. "The problem as much as anything was we weren't as diversified as we could've been."
The disclosure sheds new light on the cash crunch the university experienced in the fiscal year that ended June 30, and the sudden and urgent warnings that Harvard president Drew Faust sounded last December about the plummeting value of the endowment. [snip]
(Excerpt) Read more at boston.com ...
In my opinion, Hahvad still didn’t have enough “skin in the game.”
They should have lost it all. This country would have been better of
were it so.
I envision many wills/endowments being changed as a result. Perhaps the good news is that many institutions more worthy will now be recipients of some bequests.
And this is where Obama learned his financial genius?
Fair enough, however, George W. also had a couple of decades of business and executive experience to hone those tools. Obama had zero. The only honing Obama had came from Marxists.
These elite business schools are OVERRATED. They don’t know jack shit
I suggest the Austrian Business School to study the real economy
Ain’t that the truth! ;)
So these are the guys who graduate 91% of their students with honors? And their morons?
I’d trust any name or group of names selected randomly from the Boston phone book over any any professor or executive at Harvard University. These anonymous names could outthink, outsmart and outmaneuver the Commie dummies at the Harvard any day of the week, morning, noon or night.
Best and brightest
Does experiencing a bit a schadenfreude make us bad people? :-P
B-school and economics are not the same thing. B-school is more like engineering and economics is like science. B-school is supposed to train business leaders, economists are “thinkers” who study whatever it is that economists study.
Just as an engineer has to understand basic physics, a business should understand economics, but it’s not really surprising how many successful business leaders know very little about economics.
What is shameful is the number of politicians who nothing about either business or economics.
But does anyone at Hahvard speak Austrian?
I ask the question...once again...what makes a good school?
Then what were they recommending?
Obviously Harvard folks didn’t understand long term investing