tag:blogger.com,1999:blog-9430835.post2627181262456896895..comments2024-03-28T16:22:14.888-07:00Comments on Steve Sailer: iSteve: Rice U. and insider tradingUnknownnoreply@blogger.comBlogger41125tag:blogger.com,1999:blog-9430835.post-65920650150142056742014-05-27T20:33:32.377-07:002014-05-27T20:33:32.377-07:00From the 19 May 2014 issue of Barrons pages p24-p2...From the 19 May 2014 issue of <i>Barrons</i> pages p24-p25:<br /><br /><i> Our Top 100 Hedge Funds (based on year 2013 returns ):<br /><br /> by Eric Ulfelder</i><br /><br />In the concluding paragraph: <br /><br /><i>Just remember that all hedge funds aren't created equal. Scores closed their doors last year. And the average hedge fund returned a paltry 11.12% -- roughly a third of the stock market's gain ... </i>David Davenporthttps://www.blogger.com/profile/03315090179595817174noreply@blogger.comtag:blogger.com,1999:blog-9430835.post-59183998437814583742014-05-27T02:22:55.127-07:002014-05-27T02:22:55.127-07:00This was Buffetts play, over and over again, in hi...<i>This was Buffetts play, over and over again, in his early years. Its not that different than say, Baseball scouting.</i><br /><br />Look for value.<br /><br />Michael Milkin got into the situation that he could because he discovered that non-investment grade bonds paid so much that you could make money even when getting washed out on those that failed.<br /><br />In the 70s the Stock side of Wall Street was so unfashionable that nobody wanted to be involved in it and in that Bear market 70 cents could buy a $.<br /><br />Billy Beane's gimmick was to find valuable players among the unwanted.<br /><br />Steve's homework is to look up Andrew Winslow Jones who discovered you did not have to know which way the market was going to make money so long as you hedged yourself properly.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-63442410979658383932014-05-26T20:00:38.352-07:002014-05-26T20:00:38.352-07:00Securities markets make their money from index fun...<i>Securities markets make their money from index funds </i><br /><br />Then why do many mutual fund managers and hedge fund managers underperform market averages?<br /><br />Your assertion is the usual "financial advisor" propaganda.David Davenporthttps://www.blogger.com/profile/03315090179595817174noreply@blogger.comtag:blogger.com,1999:blog-9430835.post-66226041635512166492014-05-26T17:48:46.710-07:002014-05-26T17:48:46.710-07:00Unfortunately, some important people on the Rice b...Unfortunately, some important people on the Rice board of trustees still seems to harbor delusions of being a relevant football power, hence their decision to ignore the McKinsey report they commissioned several years ago which basically told them to drop down to DIII and take that open invitation to the University Athletic Conference (where they would be playing against institutions like Wash U, Chicago, and Carnegie-Mellon) in favor of spending $6000 per student per year to stay in DI.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-20347165822026364682014-05-26T09:52:20.930-07:002014-05-26T09:52:20.930-07:00... the diseconomy of scale holds for capital over...<i> ... the diseconomy of scale holds for capital over a few hundred thousand. </i><br /><br />This is way too low. Suppose you have $400,000. Every extra 1% of return is worth just $4000 a year and so isn't worth a lot effort. Especially since as Keynes pointed out most people will find the work involved quite tedious and boring.<br /><br />But with 10 times as much to invest you are looking at an extra $40,000 per year per point of return, with 100 times as much an extra $400,000 per year. Which will justify more effort (but of course rich people will also value their time more highly). Or hiring a manager which involves lots of costs and pitfalls in itself.James B. Shearerhttps://www.blogger.com/profile/13452342984383895221noreply@blogger.comtag:blogger.com,1999:blog-9430835.post-56650667815666000242014-05-26T09:29:18.586-07:002014-05-26T09:29:18.586-07:00Piketty is an idiot, economies of scale work exact...<i> Piketty is an idiot, economies of scale work exactly backwards ... </i><br /><br />There are many costs involved in investing. Piketty is correct that lots of them are subject to economies of scale. It takes a lot of time and effort to learn enough about investing so that you can plausibly expect to beat the market and the payoff will be insufficient compared to your opportunity costs unless you have quite a bit of money to invest.James B. Shearerhttps://www.blogger.com/profile/13452342984383895221noreply@blogger.comtag:blogger.com,1999:blog-9430835.post-84316259151346034682014-05-26T09:08:25.524-07:002014-05-26T09:08:25.524-07:00All this talk about talent in investing and still ...<i> All this talk about talent in investing and still not a jot of evidence that it actually exists apart from luck. </i><br /><br />Negative talent certainly exists. There are plenty of investments that are likely to underperform because of excessive costs. Just learning to avoid such bad investments is a kind of talent and is worth something.James B. Shearerhttps://www.blogger.com/profile/13452342984383895221noreply@blogger.comtag:blogger.com,1999:blog-9430835.post-21461524514681295342014-05-25T22:38:51.058-07:002014-05-25T22:38:51.058-07:00texas is going to be number 2 in 2014, passing eve...<i>texas is going to be number 2 in 2014, passing everybody but harvard. oil and gas are more important than insider trading.</i><br />A huge caveat to the Texas endowment is that it's system-wide, spread out over 15 institutions (9 universities and 6 health institutions). <br /><br />The $21bn endowment is still impressive, especially when compared to the $6bn endowment for the vaunted California system, but as for "Texas," meaning the flagship Austin campus, it has a long way to go before surpassing the likes of Yale, Stanford and Princeton and that's before one even accounts for the under-12,000 students at Yale vs 52,000+ at Texas-Austin.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-20961402587452514482014-05-25T21:59:38.525-07:002014-05-25T21:59:38.525-07:00@ Jody
I found a couple of links that do crunch t...@ Jody<br /><br />I found a couple of links that do crunch the numbers.<br /><br />http://leiterreports.typepad.com/blog/2012/07/per-student-value-of-university-endowmentsor-the-rich-are-even-richer-than-you-thought.html<br /><br />http://www.reachhighscholars.org/college_endowments.html<br /><br />http://in.princetonreview.com/in/2011/02/the-richest-collegesand-why-you-should-care.html<br /><br />Other Factoids:<br /><br />Rice is #7 per student.<br /><br />The size of the graduate and professional schools makes a big difference. Yale has 12,000 students to Harvards 21, 000.<br /><br />The entire Harvard endowment is .002 of the US GDP of $17 trillion. And about the same fraction of the S&P 500. <br /><br />Compared to Harvard's $30 billion, CALPERS has an investment portfolio of about $250 billion. They spend about $1 billion in outside investment expenses.<br /><br />CALPERS 10 year performance is 7%. Before inflation. The S&P 500 10 year return is a little over 7%.<br /><br />S&P returns are pre tax. In spite of hype to the contrary, wealthy individuals still have to pay taxes on dividends and capital gains. If they spend their money. If they don't spend it -- then who cares. Endowments and pension funds don't pay taxes on investment returns.<br /><br />If outcomes regress to the mean with size and diversification, then the economy of scale argument doesn't hold for capital pools between $30 and $250 billion. And it wouldn't be unlikely that Harvard, Yale and Princeton are outliers and the diseconomy of scale holds for capital over a few hundred thousand. <br /><br />A lot of the people on the Fortune 400 list made their money in a single company which is non diversified and more risky per financial theory. Especially retail and tech startups like Microsoft,Walmart, and Oracle. <br /> <br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-85691353754240622172014-05-25T19:20:03.393-07:002014-05-25T19:20:03.393-07:00well, here is the big chart on wikipedia
Re: the ...<i>well, here is the big chart on wikipedia</i><br /><br />Re: the above-mentioned UW Madison. $2B endowment, same as Williams College, which is something like 25 times smaller. Even owning huge-deal patents like ones for warfarin, vitamin D synthesis and stem cells did not seem to make UW particularly rich in comparison with exclusive private colleges. <br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-20873920348901801692014-05-25T18:40:49.162-07:002014-05-25T18:40:49.162-07:00well, here is the big chart on wikipedia. sort by ...well, <a href="http://en.wikipedia.org/wiki/List_of_colleges_and_universities_in_the_United_States_by_endowment" rel="nofollow">here is the big chart</a> on wikipedia. sort by 2013. anybody want to crunch the numbers and do an endowment per undergrad calculation? or is it better to do it for all students combined?<br /><br />some observations:<br />texas is going to be number 2 in 2014, passing everybody but harvard. oil and gas are more important than insider trading. texas A&M has all the big players in their sights as well.<br /><br />princeton and stanford are probably going to pass yale in a few years.<br /><br />williams has the most for a college, and more than most universities.<br /><br />how did virginia commonwealth go from 400 million to 1 billion in 1 year? unless it's a typo.jodynoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-72231571552754892802014-05-25T18:23:39.188-07:002014-05-25T18:23:39.188-07:00Does Picketois mention the Eskimos and that they a...Does Picketois mention the Eskimos and that they are becoming esp rich and powerful?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-27171487314988277342014-05-25T17:52:08.834-07:002014-05-25T17:52:08.834-07:00@sunbeam
"If you stayed in Wyoming, and buil...@sunbeam<br /><br />"If you stayed in Wyoming, and built a hugely success cattle, or some other kind of business, well your success is kind of a sideliner compared to how Wall Street rolls."<br /><br />This hypothesis makes sense, except when you consider that Wall Street is filled to the brim with people born in China, India, Iran and Russia. Surely that must be worse than Wyoming.DRhttps://www.blogger.com/profile/07395057401348319239noreply@blogger.comtag:blogger.com,1999:blog-9430835.post-78163490652885668242014-05-25T17:14:17.481-07:002014-05-25T17:14:17.481-07:00Rice has been slipping in the rankings since I gra...Rice has been slipping in the rankings since I graduated in the late 90s. At one point, it was #12 in the US News rankings.<br /><br />One thing that I've noticed is the rise of Wash U in St. Louis relative to Rice. At Rice, we used to look down on Wash U as a consolation school. <br /><br />Now Wash U is ranked higher. I wonder if pressure to "look more like Texas" has something to do with it.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-18970984200415549982014-05-25T15:13:24.194-07:002014-05-25T15:13:24.194-07:00Anonymous wrote:
"Tangentially related to co...Anonymous wrote:<br /><br />"Tangentially related to countries that punch above and below their weight in IQ-<br /><br />I've always thought that Rice U punches below its weight in IQ, assuming SAT scores as a proxy for IQ. Rice has higher SAT scores on average than Duke, Dartmouth, and Northwestern, yet always seems to place behind those three in the USN&WR rankings. Perhaps there is a bias against schools that are more science & engineering oriented, like Rice, and in favor of more liberal arts oriented private universities."<br /><br />My views IQ and success (financial) in this society are a little murkier than most seem to have here.<br /><br />There is an old phrase from my college days that was used a lot in some topics "necessary and sufficient condition."<br /><br />If the school you attend isn't a pipeline into the Northeast FIRE machine, whose most famous example is Wall Street, well there is a limit to how much money you are going to make.<br /><br />Some people build businesses and become huge successes, like the guy from Idaho who was a case study in Fast Food Nation.<br /><br />But by and large the money is this country is in FIRE.<br /><br />There really isn't any money in tech for the most part. You used to be able to make really good money in this country by going into manufacturing, but that is an oddity now.<br /><br />I regard the Silicon Valley software concerns as another expression of FIRE, call it Wall Street West in some ways. The stratospheric valuations of these companies come from stock values, not from day to day profits for the most part.<br /><br />Look let's say you are a kid from Wyoming. Or West Virginia, whatever. You somehow win the luck of the draw, and have the genes to possibly have say a 150 IQ.<br /><br />If you don't go to the right schools at this point, and have the right kind of major, you aren't going to make what we consider mega money now.<br /><br />If you stayed in Wyoming, and built a hugely success cattle, or some other kind of business, well your success is kind of a sideliner compared to how Wall Street rolls.<br /><br />I'd like to see how much below student IQ's Caltech punches. Guess they might be a pipeline for Wall Street quants or something.<br /><br />Slightly related to this, I think most of the large endowments at Universities were things made in previous versions of America. If your school doesn't produce mega money, which takes Wall Street or something you aren't going to hit the home run 100 million dollar donations and the like.<br /><br />People have made big contributions in the past to schools like Wisconsin, but that was a time when companies, like GM and the like were a big deal.<br /><br />And some of the schools made mega money in resource plays like the Texas schools. This just isn't in the cards anymore.sunbeamhttps://www.blogger.com/profile/16540822135478202229noreply@blogger.comtag:blogger.com,1999:blog-9430835.post-84055305497158984952014-05-25T14:42:03.063-07:002014-05-25T14:42:03.063-07:00Piketty is an idiot, economies of scale work exact...Piketty is an idiot, economies of scale work exactly backwards. Warren Buffett regularly complains he can't match earlier returns because he's not working with 10 or 100 million, he's working with 10 billion. And its a lot harder to make a fifteen percent return with 10 billion than 10 million.<br /><br />Example: You do fundamental analysis, figure a stock is undervalued relative to its assets and growth potential. You buy nearly all of the stock, its a small one, not of much interest to many people, hence its undervaluation, for $10 million. You make a 20% return. This was Buffetts play, over and over again, in his early years. Its not that different than say, Baseball scouting. Look for the up and coming prospects.<br /><br />Now lets say you have $10 billion to invest. Where? What opportunity is big enough? There are a few, but because of their size they get scrutiny that smaller players just on the verge of busting loose don't. So sure, Buffett can buy Burlington Northern, and use his pull with Obama to deep six oil pipelines so Burlington Northern carries nearly all the tar sands and oil shale oil. With predictable derailments. But he still only makes an 11% return because even with growth in rail traffic from the oil business, Burlington Northern has considerable expenses: rolling stock, paying off those derailment accident victims, etc. Its not like buying Dell Stock in the first year of the company.Whiskeyhttps://www.blogger.com/profile/01854764809682029464noreply@blogger.comtag:blogger.com,1999:blog-9430835.post-70443739250186242692014-05-25T12:54:59.032-07:002014-05-25T12:54:59.032-07:00"No, of course not. As Thomas Piketty explain..."No, of course not. As Thomas Piketty explains, HYP beat the market "By economies of scale in portfolio management.""<br /><br />I don't think many people realize how dinky the "HUGE" college endowments are compared to investable funds.<br /><br />A moderately will known mutual fund .. Fidelity Contra Fund ... has assets of $80 billion. Four times the size of Yale. More than HYP combined.<br /><br />They have done well not because of scale but because they are small enough to buy smaller assets like timberland. <br /><br />In the 1970's, Yale's endowment lost 45% of its purchasing power. (http://books.google.com/books?id=DgAv6GaGUjoC&pg=PA128&dq=yale+endowment+nifty+fifty&hl=en&sa=X&ei=8z-CU7C6BcSBqgaMkoHYAg&ved=0CCsQ6AEwAA#v=onepage&q=yale%20endowment%20nifty%20fifty&f=false)<br /><br />The Ford Foundation was instrumental in pushing endowments into US equities at the peak of the early 70's bull market.<br /><br />Harvard did better which is one reason it still #1.<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-39774322946134504732014-05-25T12:32:26.220-07:002014-05-25T12:32:26.220-07:00As another commenter has said, the law against ins...As another commenter has said, the law against insider trading is part of the interpretation of the Securities and Exchange Act of 1934 (and regulations thereunder), and so applies only to sales of "securities," not to land sales.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-2889240011466171362014-05-25T12:10:56.463-07:002014-05-25T12:10:56.463-07:00So Houston plays Rice not beacause they are hard t...<i>So Houston plays Rice not beacause they are hard to beat but easy?</i><br /><br />Nice.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-73354049773626510792014-05-25T12:03:23.177-07:002014-05-25T12:03:23.177-07:00"i used to live down the road a bit from rice..."i used to live down the road a bit from rice. Used to do a lot of biking on campus. Strange lot, rice alums. Not too much of football fans. My alma mater, Houston, beats up them regularly in football. And the rice fans don't seem to care too much. Too nerdy to care."<br /><br />See, that's what we call a good college up here in the Northeast. If I get stuck in Texas, I may try to send my (hypothetical) kids there.SFGnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-83911278342664555382014-05-25T11:01:16.032-07:002014-05-25T11:01:16.032-07:00@ 8:21 Anon,
Rice has a lower SAT average than al...@ 8:21 Anon,<br /><br />Rice has a lower SAT average than all of the three schools you mentioned (Dartmouth, Duke, and Northwestern).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-45960366376035037852014-05-25T10:12:30.962-07:002014-05-25T10:12:30.962-07:00Albert:
Steve would have said, "As good OF a...Albert:<br /><br />Steve would have said, "As good OF an education ..."smead jolleynoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-69080127601069965192014-05-25T09:53:19.206-07:002014-05-25T09:53:19.206-07:00I had a parent go to "Rice Institute" in...I had a parent go to "Rice Institute" in the 1950s when it was absolutely free to "white residents of Harris County". It was the only way they could go to school since my grandparents were dirt poor farmers. When the Board overturned the Trust for discrimination in the 1960s, they took out the free tuition while they were at it.<br /><br />I entered the school in the 1980s and the "huge endowment" did not prevent them from raising the tuition every single year. My family was really struggling at the time and I swore then I would never donate as an alumnus, and I haven't.<br /><br />Continue to today and tuition has continued to go up and Rice is no longer a "deal", but yet another university requiring rich parents or massive loans. All this from a place where it allowed the first generation from my family to attend college.<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-83270259910472327152014-05-25T09:48:34.390-07:002014-05-25T09:48:34.390-07:00Rice has higher SAT scores on average than Duke, D...<i>Rice has higher SAT scores on average than Duke, Dartmouth, and Northwestern, yet always seems to place behind those three in the USN&WR rankings. Perhaps there is a bias against schools that are more science & engineering oriented, like Rice, and in favor of more liberal arts oriented private universities.</i><br /><br />It's true. In, say, biomedical research, Duke and Northwestern are a good notch above Rice. This may change soon because Rice just went through a massive round of expensive recruiting. <br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9430835.post-92009962867024379282014-05-25T09:44:16.044-07:002014-05-25T09:44:16.044-07:00Warren Buffet has outperformed the market, too
No...<i>Warren Buffet has outperformed the market, too</i><br /><br />Not really. When apples are compared to apples, he has not. See http://www.marketwatch.com/story/warren-buffett-more-myth-than-legend-2013-07-03?pagenumber=1<br /><br />Quote: "In those 15 years, an investment of $10,000 would have grown to $21,698 in Berkshire Hathaway stock. The same money would have grown to $24,307 in the three Vanguard value funds or $37,958 in five DFA value funds."<br />Anonymousnoreply@blogger.com