David Swensen Insight

Quotes of David Swensen from his Financial Times interview

Posted on: November 4, 2009

On his anticipation of the crisis

We were absolutely aware of potential issues. And that was months before Bear Stearns. That said, we weren’t prepared for the magnitude of the crisis, or its duration.

On changing the Yale Model

There have been some articles that have criticised the Yale model and my role in managing the endowment. And I think that’s odd … What’s the alternative? Aside from the heroic impossible alternative of being 100 per cent in T-bills?

On market timing

Ultimately, market timing is an exercise in futility.  When you’ve got dramatic movements in the markets you can identify after the fact a handful of investors that succeeded in the short run. But making big, aggressive asset allocation moves isn’t a strategy that’s likely to prove successful in the long run.

On his most important advice

You should invest only in things that you understand. That should be the starting point and the finishing point… The overwhelming number of investors, individual and institutional, should be completely in low-cost index funds because that’s easy to understand.

The orginal interview is here.


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Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm applying David Swensen's insights for clients. He is also a regular contributor to Morningstar Advisor. To use his wealth management services, schedule a discovery meeting (phone call) with him.

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