How stealing Yale’s Investment Strategy Can Make You Rich

When I spoke with Jack Meyer, the former head of Harvard University’s endowment, at the offices of Goldman Sachs on Fleet Street in London back in 2009, he was thoroughly chastened by the recent 25%+ drop in the value of Harvard’s endowment. A month or two later, Stanford University’s President John Hennessy, reflecting his Silicon Valley roots, was more optimistic about Stanford’s similar collapse, telling me: “Look, Nick, it’s not the end of the world. It just puts us back to where we were in 2006.” Hennessy’s optimism notwithstanding, the crash of 2008 turned much of the global financial world on its head. This included much-vaunted “Yale model” that had made Harvard and Stanford tens of billions of extra dollars over the past two decades.

Despite the challenges of the market meltdown of 2008, the “Yale model” remains one of the most powerful investment strategies around. And thanks to exchange-traded funds (ETFs), today you can duplicate this investment strategy in your own personal investment portfolio. It is also an investment approach I have implemented with impressive success through the “Ivy Plus” Investment Program for my clients at my investment firm Global Guru Capital.

For a period of more than 20 years, the investment strategies of top university endowments seemed blessed by fairy dust. The top three U.S. university endowments — Harvard, Yale and Stanford — consistently had returned more than 15% per year over the last decade. And even after the onset of the credit crunch in the summer of 2007, the Harvard endowment gained 8.6%, Stanford rose 6.2% and Yale climbed 4.5% through June 30, 2008. That compared with a drop of 15% in the S&P 500 over the same time period.

That all changed once the financial crisis hit in full force in 2008, and the top university endowments plummeted by 25%-30%. The joint losses for Harvard, Yale, Stanford and Princeton hit $23 billion in the 12 months ending June 30, 2009.

Maybe those Ivy League types weren’t so smart after all…

Since the dark days of 2008, top university endowments have staged a comeback. Primed by savvy investments in technology, Stanford’s endowment rose 14.4% in the year ended June 30, 2010, outshining returns at Harvard and Yale, which gained 11% and 8.9%, respectively.

Yale’s David Swensen: The “Babe Ruth of Investing”

You can trace the long-term investment success of top university endowments directly back to the efforts of a single man, Yale’s David Swensen.

As the Yale endowment’s chief investment officer for two decades, David Swensen has earned a reputation as the “Babe Ruth” of the endowment investment world

After taking over the Yale endowment in the mid 1980s, Swensen boasted 15.6% average annual returns through 2007 and no down years going back to 1987.

So, how did Swensen’s success single-handedly change the rules of institutional investing?

In 1985, around the time Swensen took over, Yale had more than 80% of its endowment invested in domestic stocks and bonds. But Swensen, an economics PhD, observed that no asset allocation model ever actually recommended that way. As long as their correlation with U.S. stocks and bonds was low, adding unconventional assets to your portfolio would both reduce your risk and increase your return. This led Yale to emphasize private equity and venture capital, real estate, hedge funds that offer long/short or absolute return strategies, raw materials, and even more esoteric investments like storage tanks, timber forests and farmland.

Until the fall of 2008, this approach worked almost like magic…

The “Yale Model”: Still the Best over the Long Run

But the relatively poor performance of the Yale endowment during the crash of 2008 put Swensen on the defensive. Critics pointed out that during the meltdown, a traditional portfolio of 60% stocks and 40% bonds would have lost only 13% of its value, rather than the 25% or more lost by the diversified portfolios of Harvard, Yale and Stanford.

But as Yale’s President Richard Levin pointed out in Newsweek magazine, that argument is astonishingly shortsighted. Over the past 10 years, including the crash, Yale’s endowment managed average annual returns of 11.7% to reach its current value of $16 billion. A 60/40 portfolio over the same period would have earned 2.1%, producing an endowment of only $4.4 billion. Put another way, Swensen’s strategy had earned Yale an extra $11.6 billion over 10 years. That indirectly made Swensen one of the world’s largest philanthropists, on par with Warren Buffett and Bill Gates.

Throughout the crisis, Swensen remained adamant that the model was viable over the long run. He pointed out that the single worst thing that you can do is to avoid risky assets after a market crash. He knew that Yale had suffered from poor decisions on asset allocations in its past — one that had put Harvard-level wealth out of its reach forever.

You see, at the time of the market crash in 1929, the endowments of Harvard and Yale were roughly the same size. But Yale’s trustees got spooked and invested heavily into “safe” bonds for the next five decades, while Harvard tilted more toward stocks. The result? Over the next 50 years, in relative terms, Yale’s endowment shrunk to half the size of Harvard’s.

Since the crash of 2008, Harvard has implemented the lessons of 1929 well. Leaving its critics aghast, Harvard actually has increased its allocation to high-risk positions in alternatives, at the expense of its “safe,” fixed-income allocation.

Yes, You Can Replicate Harvard’s Success…

In 2005, Swensen published a book, “Unconventional Success: A Fundamental Approach to Personal Investment,” which explains how you can apply Yale’s investment approach to your own portfolio. Swensen argues that Yale’s investment strategy is tough for you to duplicate. After all, Yale has 20 to 25 investment professionals (Harvard at one time had as many as 200) who devote their careers to looking for investment opportunities. Yale also has the deck stacked in its favor. Its sterling reputation allows it to invest in the very best private equity and hedge funds — asset classes that are not readily available to retail investors. As Mohamed El-Arien, a former head of the Harvard endowment put it, attempting to duplicate Harvard’s results “would be like telling my son to drop out of school and play basketball with the goal of becoming the next Michael Jordan.”

Of course, highly paid investment managers like El-Arien have every reason in the world to overstate the impact of their “skill.” But this does not dilute Swensen’s basic message: to focus on the “big-picture” asset allocation decisions and move your money out of U.S. stocks and bonds into global and other asset classes. Swensen himself recommends that you model Yale’s asset allocation through a portfolio consisting exclusively of index funds with low fees.

At my firm, Global Guru Capital, I have run an “Ivy Plus” Investment Program that replicates the investment strategy of the top university endowments using Exchange Traded Funds (ETFs) for the past two years. So far, it has behaved exactly as advertised. In the 12 months between June 30, 2009 and June 30, 2010- dates for which Havard has released performance data – the performence of the fully invested “Ivy Plus” investment program has matched the Harvard endowment almost exactly.

Of course, two years isn’t a long time. But the “Ivy Plus” strategy has outperformed some of the top hedge funds in the world during some of the toughest times ever in financial markets, by sticking to a disciplined, highly diversified asset allocation strategy.

My biggest challenge? The “Ivy Plus” investment program is a hard strategy to “sell” to my potential clients. It just seems too unexciting and straightforward to believe…

The bottom line? You may not have access to the Michael Jordans of the investment world. But diversifying out of a standard U.S. stock and bond portfolio into asset classes like commodities, real estate, and global stocks and bonds can go a long way toward generating Harvard-style returns.

Maybe those guys and gals at Harvard, Yale and Stanford aren’t so dumb, after all…

Experiencing the BlackBerry PlayBook Innovation

BlackBerry PlayBook entered the market just a few months ago, and people are already clamoring to become the owner of one. The BlackBerry PlayBook is a seven-inch, 1024×600 WSVGA LCD touch screen on a 130mm x 194mm x 10mm tablet that is designed for portability and usability. Unlike the smartphones usually produced under the same brand name, BlackBerry PlayBook runs on the new BlackBerry Tablet OS. The new OS is founded on the QNX Neutrino real-time operating system, which was designed to run ADOBE AIR as well as BlackBerry WebWorks applications. BlackBerry prides itself on being able to produce a lighter and more portable tablet than its competitors while still not sacrificing any of the applications needed for better performance.

Some of the BlackBerry PlayBook features include a 1 GHz dual core processor which pairs up with the product’s multi-touch display and ability for multitasking. This means that users can perform multiple demanding tasks without compromising speed. Included in the perk’s list is a 3 MP front-facing camera which can be used for video conferences over Wi-Fi. It also features a 5 MP rear-facing camera which is capable of supporting up to 1080p film playback.

But features are only a small part of the package. On the other hand, the PlayBook also has as many as three thousand additional applications from BlackBerry App World present during the initial BlackBerry PlayBook launching. Unlike BlackBerry smartphones, however, BlackBerry PlayBook apps do not include the characteristic mail, contacts and calendar applications. As of now, the only way to be able to access these on your PlayBook is to utilize the BlackBerry Bridge to facilitate pairing between the PlayBook and your BlackBerry smartphone. This can become quite a downside for non-BlackBerry smartphone users.

Many reviewers and comments about BlackBerry came out after the initial release. Some were quite positive in their assessments while others seemed bent on nothing but negative analysis. The main argument seems to be on the fact that the producer company decided to remove the mail, contacts and calendar applications from the PlayBook itself. Although as stated earlier, one can still access them through BlackBerry Bridge. In response to these reviews from their customers, the company has made plans to make these apps available on the next software update on the PlayBook. Other BlackBerry PlayBook software updates to look forward to include the addition of BlackBerry Java and Android-based applications in BlackBerry App World.

How Retail Software Is Making Staff Training Easier And Reducing Costly Errors

We have all been there, so we all know that starting a new job is a stressful thing with first day jitters almost certainly leading to at least one mistake being made. Employers, generally, understand that not everything will go right, but what the mistake is and how costly it might be is a cause for concern. Training, however, is a key strategy in reducing such errors and, today, retail software is available that plays its part in keeping errors to an absolute minimum.

Errors can occur in a variety of ways and at any particular time, so stopping them completely, even amongst experienced staff, is impossible to do. When it comes to using retail epos systems, a specific working knowledge of the machine, the retail system on the ground and the software program in question is required. Training will aid a new recruit greatly but ecommerce systems can remove the complexities that are often the root cause of mistakes in the first place.

In the hospitality industry, waiting staff can break plates, while in the service industry, request forms can be misclassified. When it comes to point of sale services, something as simple as miskeying an item can translate into lost revenue for the day, with too little being charged or too much change being given.

Some businesses will arrange training weekends, but this can end up costing a lot of money. It requires time away from the business, which means lost man hours. These hours must be paid for though, while the cost of hosting the training seminar must also fall on the shoulders of the business owner. For smaller businesses, of course, training may simply mean having a new employee observe and note the way in which things are done, but this only provides a certain degree of familiarity. In all cases, training cannot replace experience, only help an employee to catch up with the established staff.

However, the complexities of the daily tasks employees are asked to perform is can be reduced dramatically by the software used as part of an epos system. On the simplest level, all employees should be able to deal with point of sale services quickly and efficiently. This depends greatly on the register system that is being used, but with the use of simple layouts and clear graphics, the risk of error is reduced dramatically.

For example, in a grocers, instead of a list of vegetables to choose from, picture images of each are displayed, with touch screen technology allowing the employee to press the image, not drag a cursor over the name. This method not only reduces the risk of charging for pears instead of more expensive pineapples, but also allows for quicker selection and, ultimately, a faster point of sale service.

Promotions, special price reductions, sales, concessions and voucher offers are all aspects of modern business designed to bring customers into the shop, and it is vital that these are dealt with expertly and efficiently by staff. The problem is that keeping track of everything can be confusing.

Often, a concession needs to be calculated, requiring a calculator and a few minutes to come to the figure and check that it is correct. However, concession rates on specific items can be preprogrammed into the system. In the case of seasonal sales, the relevant percentage discount for each item can also be programmed, as well as the dates that the sale applies to, allowing staff to deal more effectively with customers, and not waste time calculating each price.

Many businesses offer loyalty schemes as a means to encourage customers to return. Loyalty points need to be calculated and noted, which modern retail software are also designed to do automatically. Their range of capabilities does not stop there, of course, with ordering, stock keeping and online sales all incorporated in ecommerce systems that make life a lot easier for the modern business person.

In terms of employee training, though, the simplicity of the retail epos systems available means that within half an hour a new recruit can have all but mastered their new role. This means an immediate reduction in the risk of costly errors being made, easing the nerves of the employer as well as the new employee.

Importance of construction companies

Today we are living in the modern era. This is the era of advancement in every field that includes industrialization, urbanization etc. Also in this modern world everyone wants to make more and more money. People are migrating towards big cities in search of good jobs and higher education. And therefore population is increasing day by day in big cities and to adjust these people in these cities more and more buildings are being constructed. And for that more and more urbanization is taking place. Even small cities are being developed and a lot of construction work is also done there. So we can see that now a day there is huge demand of construction engineers. In past building making was not a big deal. Even persons without proper qualifications use to make building. But now a day the entire scene has changed. Today for this purpose one has to be properly qualified. Building buildings without proper qualification is an offence and is punishable. Also it is very risky. Now a day there is a complete procedure of building buildings. First of all owner of the building has to pass the map of the building he want to build. Then the contract of the building is given to a contractor and then he supervises the work of that building. For all this stuff there are a lot of universities which provide these type of courses like owner builder courses, professional building courses etc. This is a new field with a lot of scope. Now a day many youngsters are going towards this direction because they know it is an evergreen field because new buildings cause urbanization is not going to stop, new buildings will be made and there will be a constant demand of these youngsters. In many countries there are some extra rules one has to follow to construct a building. For example in some countries there is rule that to construct a building exceeding a certain amount one has to take permission. This is called construction induction. In this process one has to make a card to make the building which is exceeding a certain amount. There is also a rule in some countries that to make a building exceeding a certain number of floors one has to take permission. It is because at certain places making big buildings is not safe. So we can see that this is a rising field with a lot of scope and this is the reason why more and more youngsters are choosing this field.

For more information please visit owner builder courses >

Cloud Migration Strategy For Enterprises

Most of us use the cloud services without even knowing it. If you are using any internet service like Facebook or a smartphone app where you give out your information or upload your pictures and other information you are most probably using a cloud service. So, what is a cloud service? .Services offered by companies who store the information of various business organizations and even the information of an individual who uses the services of internet based companies like job websites, social networking websites and other services using data center, which is a centralized location for the storage, management and circulating data and information for a particular business.

Benefits of Cloud Computingfor Enterprises

Cloud computing provides enterprises with services in the form of software,platform and infrastructure. Cloud computing service providers make sure that your data is secure and is accessible to the authorized persons. One of the best benefit of cloud computing is that it provides scalability, so if you plan to grow your business you dont need to worry about the infrastructure to accommodate the workload. The employees of the enterprises can work from any location using the internet with their security access credentials. This makes enterprises to work more efficiently without worrying about the data loss due to power fluctuation or natural calamities. One of the biggest advantages of using cloud computing is that it is cost efficient. It lowers the company IT expenses and you dont need to worry about upgrading and maintaining the IT expenses on your own. It provides enterprises with unlimited storage space for their data

Drawbacks of Cloud Computing

Cloud computing is dependent on the internet connection. You need to have a fast internet connection to access the services. If you have intermittent internet connection or slow internet speed issues, you might want to fix them before switching to cloud services. One of the major concerns with the cloud services is the security. Storing the valuable company data using a third party cloud service provider puts the information at a great risk. Also the enterprise data is vulnerable to threats and attacks from hackers which hesitate some of the enterprises to switch to the cloud based services.

Effective ways to use Cloud Computing

Using Cloud service has both advantages and disadvantages based on the strategies implemented by the enterprises. An enterprise requires a Cloud service provider which ensures the security and scalability of the data. More importantly if the data can be migrated in the future, if the company decided to use the service from other cloud service providers. Enterprises need to choose a service provider that takes the security of the data seriously and updates their security sensors regularly to protect the information from the latest threats and hacks. All the data must be classified according to the importance of each section. All the data must be stored in correlating manner to prevent the data from being manipulated and avoid redundancy. But with more and more improvements in the cloud services, many Enterprises and mostly the startups are switching to cloud based services.