Investing Advice from Yale

I happened to catch an interview with Yale's David Svensen on WNYC (where one can probably pick up a transcript) who over the past 20 years has built Yale's endowment from $1.3 billion to $15+ billion at an average rate of 16+% each year. He has brought out a new book for
personal investors in which he condemns the usual retirement trap of mutual funds administered by profit-making 'financial advisors' -- which he points out have a losing record -- and recommends two non-profits -- TIAA:

http://www.tiaa-cref.org/ which has done well by us academics and others fortunate enough to plug in or the non-profit Vanguard Fund:

http://www.vanguard.com/VGApp/hnw/CorporatePortal

These two funds have other advantages in the no tax until retirement domain as well as no fees. They offer flexibility in switching from one category to another of general investments as the markets and one's approach to retirement warrants.

He book is called Unconventional Success: A Fundamental Approach to Personal Investing:

http://ww8.shrewd.com/cgi-bin/q.cgi?isbn=0743228383

What he had to say made much sense. And the idiot representing mutual funds waffled and sounded panicked. The double problem according to Svenson is that investors don't have a balanced port folio which he recommends -- something like 30% equities as I recall, 15% overseas, 15% real estate, 30 percent conservative things -- BUT NOT mutual funds which only make money for your advisor at a lower rate than simply indexing.

I have mentioned that both of my daughters have lucked into TIAA which they can now use for life -- one with a semester managing the computer center briefly at Barnard after she graduated which had been her scholarship job and the other with a brief internship at NASA.

Hopefully this may help some who have been stranded with their 401k's in the wrong stuff. He says that the other problem is that individuals tend to chase the rising things which are peaking often and dumping the things that have dropped at just the wrong moment when they may rise
again, thus churning themselves into losses rather than gains.

Good luck! Hope this advice does not come too late. Remember those 'advisors' are taking a cut and it is in their interests to churn your stocks or whatever for their own profit. I learned from my broker father not to believe either investment counselors or the street wisdom, unless it was very inside dope about something about the dive (Frist getting out of his health care stock, Benno Schmidt out of Edison, and Martha Stewart taking advice to dump something that got her into jail for a stretch -- where many an insider belongs much more than she.

P.S. Columbia might want to pick up his earlier book directed to portfolio managers.

P.P.S. He also pointed out that the mutual funds that advertise their profits are the ones that happened to make them -- not the ones that died -- and also points out that the future will not necessarily resemble the pasts being boasted. Ninety-six percent of these funds have returns below indexing (across the board with stocks) and not counting fees all too often hidden in the vast pages of conditions.
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