I’ve written before on the enormous losses Harvard recently sustained as a result of the investments of its endowment funds and capital accounts. The Boston Globe has now published an article on how the losses happened. It’s a familiar story and good lesson for anyone managing their 401(k) account. People made aggressive investments notwithstanding cautions about risks, the aggressive investments produced very strong returns for a time, and the investment decisionmakers overlooked the risks, focused on the returns, and then took an uppercut when the markets went south. They forgot the basic questions all investors should ask: what am I looking to achieve with my account, and how much risk am I willing to take to try to achieve that goal? These questions should be asked regularly — not just when the markets experience a downturn.
Not Smart (Cont.)
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