Nom De Plum

What You and I Can Learn from the Endowment Blowups

Risk premiums were overpriced in 2007 (too low) and underpriced in 2009 (too high). These funds should ABSOLUTELY increase risk exposure. The investment committees should look at 10-yr track records of delivering alpha and allocate more capital to those managers that should be able to identify undervalued securities (those with risk premiums that are too high).