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Professor Bob Webb (left) and Jack Meyer. |
McIntire students were treated to a
presentation by former President and CEO of Harvard Management
Company Jack Meyer Sept. 12, 2006, in Ruffner Hall Auditorium.
Meyer, noted for having grown Harvard University’s endowment from
less than $6 billion to more than $27 billion between 1990 and 2004,
stressed the importance of well-designed organizational structures
and a rational, disciplined approach to investing.
A well-crafted reporting structure, Meyer pointed out, can help
prevent the ill effects of one person’s poor investment decisions
from infecting the entire financial institution, as happened to ING
Barings Bank—to the tune of $1.4 billion—in 1995. A steady,
disciplined approach to investing can help mitigate the risks
inherent to investing. “It’s incredibly hard to forecast where the
market will go,” Meyer said, “and it’s not necessary to do so. It’s
not necessary to do anything but have a firm investment strategy.”
Indeed, Meyer referred to tactical asset allocation—that is,
investing according to what you think the market’s next hot sector
will be—as a “dangerous business.” Strategic planning, Meyer said,
has nothing to do with guessing at stock trends or the direction of
the market. Rather, it has to do with developing a firm policy on
the allocation of assets among diverse asset classes, and devising a
single benchmark against which to measure your performance.
Otherwise, Meyer said, “no amount of clever trading can save you.”
Meyer also addressed some of the challenges of running a
university’s investment fund, including the difficulty of dealing
with unusual gifts such as stamp collections and ski slopes, and the
need to balance fund growth with the faculty’s social and political
agendas.
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