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Harvard's losses tied to cash decision [$2B loss]
Boston Globe ^ | October 16, 2009 | Beth Healy

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 ...


TOPICS: Business/Economy; Education
KEYWORDS: educationfunding; endowment; harvard; highereducation
That's a lot of Crimson bleeding.
1 posted on 10/17/2009 4:02:09 AM PDT by Daffynition
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To: Daffynition
Wasn't that how they wanted us to save our Social Security funds?
2 posted on 10/17/2009 4:08:30 AM PDT by joesbucks (Sarah Palin: "I believe John McCain is the best leader that we have in the nation right now,)
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To: Daffynition

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.


3 posted on 10/17/2009 4:09:05 AM PDT by Gaffer
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To: Gaffer

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.


4 posted on 10/17/2009 4:18:34 AM PDT by Daffynition (What's all this about hellfire and Dalmatians?)
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To: Daffynition

And this is where Obama learned his financial genius?


5 posted on 10/17/2009 4:23:33 AM PDT by norwaypinesavage (Global Warming Theory is extremely robust with respect to data. All observations confirm it)
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To: norwaypinesavage
Only to be fair:

"Harvard gave me the tools and the vocabulary of the business world," George W. Bush

6 posted on 10/17/2009 4:28:03 AM PDT by Daffynition (What's all this about hellfire and Dalmatians?)
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To: joesbucks
No.
7 posted on 10/17/2009 4:36:32 AM PDT by hinckley buzzard (Truth--The liberal's Kryptonite)
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To: Daffynition
""Harvard gave me the tools and the vocabulary of the business world," George W. Bush"

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.

8 posted on 10/17/2009 5:00:45 AM PDT by norwaypinesavage (Global Warming Theory is extremely robust with respect to data. All observations confirm it)
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To: norwaypinesavage

These elite business schools are OVERRATED. They don’t know jack shit

I suggest the Austrian Business School to study the real economy


9 posted on 10/17/2009 5:07:40 AM PDT by 4rcane
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To: norwaypinesavage

Ain’t that the truth! ;)


10 posted on 10/17/2009 5:07:51 AM PDT by Daffynition (What's all this about hellfire and Dalmatians?)
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To: Daffynition

So these are the guys who graduate 91% of their students with honors? And their morons?


11 posted on 10/17/2009 5:15:29 AM PDT by DaBunny
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To: Daffynition
Harvard? As in Harvard BUSINESS school? You mean the one who trains MBAs and stuff?

LOL

12 posted on 10/17/2009 5:32:14 AM PDT by McGavin999
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To: Daffynition

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.


13 posted on 10/17/2009 5:47:49 AM PDT by WashingtonSource
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To: joesbucks

Best and brightest


14 posted on 10/17/2009 5:52:20 AM PDT by takbodan (.)
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To: McGavin999; WashingtonSource

Does experiencing a bit a schadenfreude make us bad people? :-P


15 posted on 10/17/2009 5:54:49 AM PDT by Daffynition (What's all this about hellfire and Dalmatians?)
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To: 4rcane

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.


16 posted on 10/17/2009 5:57:58 AM PDT by Lonesome in Massachussets (The People have abdicated our duties; ... and anxiously hope for just two things: bread and circuses)
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To: 4rcane
I suggest the Austrian Business School to study the real economy

But does anyone at Hahvard speak Austrian?

17 posted on 10/17/2009 5:58:08 AM PDT by newfreep ("Liberalism is just Communism sold by the drink." - P.J. O'Rourke)
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To: 4rcane
These elite business schools are OVERRATED. They don’t know jack shit

I ask the question...once again...what makes a good school?

18 posted on 10/17/2009 6:06:16 AM PDT by VRW Conspirator (Who is Hugh Series?)
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To: hinckley buzzard

Then what were they recommending?


19 posted on 10/17/2009 6:19:44 AM PDT by joesbucks (Sarah Palin: "I believe John McCain is the best leader that we have in the nation right now,)
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To: norwaypinesavage

Obviously Harvard folks didn’t understand long term investing


20 posted on 10/17/2009 6:27:58 AM PDT by Son House (OcarterCare by Congress will make all Americans = Wards of the State)
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To: Daffynition

And the ***-d*mned idiot nearly destroyed America and the Republican Party with his socialist policies. His insistence that banks give mortgages to illegal aliens (based on a legal interpretation from Clinton, to be fair) is what caused a huge portion of the mess we’re in.


21 posted on 10/17/2009 6:34:40 AM PDT by dangus (I am JimThompson)
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To: McGavin999

Yep, the very same. As the captain of the Titanic said,
“Trust me, I’ve had a lot of training”.


22 posted on 10/17/2009 6:35:15 AM PDT by count-your-change (You don't have be brilliant, not being stupid is enough.)
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To: Daffynition
Right. And we're supposed to trust this idiot organization with turning out our best and brightest? After Barry gets an obviously affirmative action PhD?

We've established they know nothing about law and now finance. What other Cracker Jack box degrees are they scamming tuition for?

Harvard should close and sell the campus as an ornate whore house. That's all it is now anyway.


Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

23 posted on 10/17/2009 6:38:14 AM PDT by The Comedian (Evil can only succeed if good men don't point at it and laugh.)
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To: The Comedian
"Harvard should close and sell the campus as an ornate whore house. That's all it is now anyway."

Meh. Anyone ever associated with Boston college life would know the "tie-on-the-door knob" signal ... but now days, I understand they just use a condom. 8-D

24 posted on 10/17/2009 6:47:50 AM PDT by Daffynition (What's all this about hellfire and Dalmatians?)
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To: Daffynition
Anyone ever associated with Boston college life would know the "tie-on-the-door knob" signal

When the dorm room's a-rockin, don't come a-knockin?

or

When the temporarily-assigned college-affiliated student housing sleeping quarters are presenting quasi-harmonic(*) motion, please refrain from striking the usually wooden, but sometimes likely to be metal or metal-and-wood, hinged entryway in a rhythmic, but such rhythm not necessarily in resonance with the harmonic motion of the room, fashion, in order to gain the attention of the occupants? /Harvard>

Cheers!

(*) or hormonic, actually.

25 posted on 10/17/2009 6:55:56 AM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: grey_whiskers
"hormonic"

HAHAHAHA!

26 posted on 10/17/2009 7:01:16 AM PDT by Daffynition (What's all this about hellfire and Dalmatians?)
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To: Daffynition

Nah, I don’t think it makes us bad people at all. Besides, laughter is really good for your health, and I’ve been laughing about this all morning.


27 posted on 10/17/2009 7:07:55 AM PDT by McGavin999
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To: McGavin999

Heck. I’m so pumped up by Harvard’s good luck, I’m going out to buy a PowerBall ticket.


28 posted on 10/17/2009 7:12:37 AM PDT by Daffynition (What's all this about hellfire and Dalmatians?)
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To: Daffynition
Harvard's losses tied to cash decision [$2B loss]

It's very hard to sympathize with them. They have a $34 BILLION endowment. Most Universities would be lucky to even have a third of that.
29 posted on 10/17/2009 7:24:52 AM PDT by SeekAndFind (wH)
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To: SeekAndFind

I agree, as noted above. ;-D


30 posted on 10/17/2009 7:43:35 AM PDT by Daffynition (What's all this about hellfire and Dalmatians?)
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To: Daffynition

They should have hired a team of Harvard MBA’s and finance professors to manage their money. Oh, wait...


31 posted on 10/17/2009 11:37:55 AM PDT by Tax Government (Mighty nuts from tiny Acorns grow.)
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To: Tax Government

All the *good* ones have been recruited as czars in the Zero administration. Harvard was left with the dregs. ;)


32 posted on 10/17/2009 11:54:24 AM PDT by Daffynition (What's all this about hellfire and Dalmatians?)
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To: Daffynition

I’m crying a river for Harvard—NOT!!


33 posted on 10/17/2009 1:54:21 PM PDT by Excuse_My_Bellicosity (Liberalism is a social disease.)
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To: Daffynition

A liberal and his money are soon parted.


34 posted on 10/17/2009 1:54:43 PM PDT by Excuse_My_Bellicosity (Liberalism is a social disease.)
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To: Excuse_My_Bellicosity
LOL ...that would be the Charles River, to be exact. ;P


35 posted on 10/17/2009 1:57:10 PM PDT by Daffynition (What's all this about hellfire and Dalmatians?)
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