Yale’s David Swensen, under whose aegis the university's endowment soared to $22.9 billion from $1 billion, says buying debt is a smart move now.

"There are some really extraordinary opportunities in the credit world," Swensen told Bloomberg.

"Everything, from bank loans to investment-grade bonds to less-than-investment grade bonds, is priced at really extraordinarily cheap levels."

Swensen says periodic losses are inevitable in a portfolio tilted toward stocks and built to grow over many years.

“There isn’t an investment strategy that can produce the kind of long-term results we’ve generated at Yale that isn’t going to post the occasional negative return,” he notes.

“Judging a long-term investment strategy based on the results of a five-to-six month period is foolish beyond words.”

Because the endowment Swensen heads bases its distributions on an average of five-year returns, the consequences of any loss this fiscal year will be blunted by the gains of previous years.

Swensen also believes firmly in the value of diversifying, a principle he sees being forgotten as investors race to dump equities in favor of U.S. Treasury bonds.

“When you have a real crisis, there tends to be a flight to quality,” T. Rowe Price asset allocation head Ned Notzon told the New York Times.

“And the one sector that will do extremely well in such a market will be Treasury bonds.”