Tags: yale | endowment | buy | stock

Yale Endowment Guru Says Buy, Buy, Buy!

By Michael Kling   |   Friday, 13 Mar 2009 02:38 PM

Now is the time to load up on stocks, urges David Swenson, who runs Yale’s endowment. Buy and buy with gusto, he says.

Average investors loved stocks 18 months ago but now fear them, he notes.

“That's 180 degrees wrong,” he tells Yale Alumni magazine. “They should have been cautious 18 months ago, when prices were much higher than they are now. They should be enthusiastic today.”

That’s hard, he admits, but investors should fight human nature by being suspicious of winners and hopeful for losers.

However, Swenson recommends buying through low-cost index funds. Few people have the time or ability to be good stock pickers and most mutual funds charge high fees, trade too frequently, and generally underperform the market.

Billed as Yale’s in-house Warren Buffett, Swenson had 20 years of positive returns until last year’s crash.

Buffett himself also recommends buying now, even though he believes that the economy will probably remain slow into next year.

“Though the path has not been smooth, our economic system has worked extraordinarily well over time,” Buffett writes in his annual letter to Berkshire Hathaway shareholders.

“It has unleashed human potential as no other system has, and it will continue to do so.”

With the S&P 500 index down 38 percent last year, the most since 1937, bargains are available, he points out.

“We enjoy such price declines if we have funds available to increase our positions,” Buffett told his investors.

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Now is the time to load up on stocks, urges David Swenson, who runs Yale’s endowment. Buy and buy with gusto, he says. Average investors loved stocks 18 months ago but now fear them, he notes. “That's 180 degrees wrong,” he tells Yale Alumni magazine. “They should have been...
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