Quote for the Week
This investment management business, when stripped down to its bare essentials, is really quite simple. Now, why do I say that? Well, I think if we took the group here today and divided you up into smaller groups of four, or five, or six and asked you to talk about what’s really important in managing a portfolio that has a very long time horizon, I think that almost all the groups would come to very similar conclusions. If you’re investing with a long time horizon, having an equity bias makes sense; stocks go up in the long run…
The other thing that I think would come out of the discussions is that diversification is important. Anybody whose read a basic finance text, as a matter of fact, I think anybody who thinks about investments in a common sense fashion knows that diversification is an important fundamental tenet of portfolio management. As a matter of fact, Harry Markowitz called diversification a “free lunch.” We spend all our time in Intro. Econ. figuring out there is no such thing as a free lunch but Markowitz tells us that diversification is a free lunch… For any given level of risk, you can increase the return; sounds pretty good. That’s pretty simple, right? Two tenets, an equity bias for portfolios with a long time horizon and diversification. — David Swensen (source)
From the Archives
Last Call
- What Actually Drives Stock Prices? – Jake’s Newsletter
- How Deals Hurt Returns – Humble Dollar
- Memories of Good Investments… – Klement on Investing
- A Positive Stock-Bond Correlation Is a Terrible Reason to Add More Equity Risk to Your Portfolio – AQR
- What’s Going on in Private Credit? – H. Marks
- Echoes of Junk Bonds Past – Verdad
- You Can’t Suck at Passwords – Joint Account
- Your Taxes Were Designed to Suck, Actually – Your Brain on Money
- What 1,000-Year-Old Companies Know About Resilience – Big Think
- In Photos: Artemis II Journey to the Moon – NASA and flickr