P.S. If you hear anything about the fate of the two new residential colleges, please let us know. We have sympathy. The completion of our massive library/classroom and faculty offices project is over halfway done and is currently in limbo, deferred for at least a year. Since our President is leaving over the summer, I suspect that it will be deferred longer than that. We are in good shape, though, as we have new classrooms, offices, and a library storage facility and a relatively new science library, and the other existing library is still quite serviceable. Yale, too, could hold off on its dreams for a few years if necessary.

I’ll try to be forthcoming with the updates on other classes.

Those figures were from the news coverage back towards the beginning of the year – before the real carnage, referring to fiscal 07-08 mostly, when signs of trouble were appearing in the endowment reports.

more spin: http://www.dailyprincetonian.com/2008/10/22/21890/
http://www.dailyprincetonian.com/2008/10/21/21862/

etc

sorry if I am bad about responding, currently have to study for an econ final (ha, ha) and write another paper before I can go home!

Maybe I linked the wrong article; there was mention in it of Swensen betting against subprime.

Anyway, yeah, we got the college-wide Harvard-esque “sorry guys, where did all the money go?” email, although less shocked and horrified than Faust’s. Just some slowdown in capital spending after current projects, minor staff reductions, that kind of thing, but less of a freeze than elsewhere. Woo. Will post the email on my blog shortly…

But, the short run does present dangers especailly for trustees of colleges, who are suppossed to be more cautious with others $ than with their own $. The S and and P has only been paying 1 and 1/2 % in dividends in recent years. If you spend 5% a year of endowment to support your budget, you have to dip into capital. Especially, if lots of your portfolio is in hedge funds that pay even less in dividends. This is great as long as the S and P is growing at its historic 7% growth. It’s hunky-dory, if due to astute investing in hedge funds, foreign markets etc you beat the S and P by a per cent or two or three a year. But, the game changes if you start losing double digits of capital a year for one, two, or three years in a row. And a decline like the current one makes life even more dificult.

I think colleges have to be bold, even damn bold, especailly with financial aid and maintaining the quality of life, the best students and faculty expect. I don’t think it is feasible not to dip into endowment at all to meet current expenses even during years like the present one. But, one has to try to keep it down.

Nuts is right, it is a nice post. I especially like the ‘Swartian’ influence on your visuals. For a minute I thought Dick was back. Miss his ‘witzardry’.

And though I may not be commenting, I am following the discussion…kind of…in my own way…and do very much appreciate the time and effort you make in putting it all together.

I will say, that present economic circumstances and viewpoints, do have me remembering back to the beginning of all this…when (in certain corners) Morty was highly criticized for projecting too much “doom and gloom”.

Yale did OK, Princeton did decently (minor decline)

What timeframe are you talking about?

2) Sam: Still want to read about your course experiences this semester, in reference to this discussion. (And would love to hear from Anna too!) Also, the link you provide tells us nothing about Yale’s endowment. I have seen no performance numbers. Is it down 30% like Harvard’s? Is it flat? No one seems to know, as far as I can tell.

3) Harvard is what it is. The typical student would be happier at Williams than at Harvard, but there is (obviously) a lot more than “smoke and mirrors” in Cambridge.

Interesting times!

I believe that Stanford and Harvard are moving quicker to reduce faculty expense because they have an additional problem. A faculty that consists of large numbers who don’t teach students, but who exist solely to generate research revenue that will dry up almost immediately.

Despite all the protestations to the contrary, I don’t believe there will be a college or university that doesn’t end up cutting faculty expense, both in terms of numbers and compensation. The required cuts are simply too drastic to exempt the faculty, unless we see a signficant bounce in endowments between now and July 1st.

You are exactly right. Harvard’s greatest asset is its ability to hype itself. But, the hype works. The BOSTON GLOBE often refers to Harvard as WGU (for worlds’s greatest university. With apolgies to the CHICAGO TRIBUNE, which calls itself the World’s Greatest Newspaper and owns a radio station, WGN, and a TV station WGN-TV)

But, Harvard gets lots of great kids from Wyoming and Peru and far places on the basis of the myth. It is not being the best, but being thought the best that draws them in. I met a young woman at the University of Lima at my last international labor academic conference. The brightest person at U. of Lima was this incredible undergrad. Brighter than any of the grad students or faculty. She was going to go to grad school in Economics abroad. And was considering Harvard, MIT, Berkeley, and Chicago. But, there was no way her folks were going to let her go anywhere but Harvard. As they told her, everyone in Peru has heard of Harvard. Not everyone has heard of the other places.