David Swensen explains the investing world (and bashes Jim Cramer)

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The early (internal) versions of that list of the 25 People to Blame for the Financial Crisis included Yale University chief investment officer David Swensen (it was Barbara’s brilliant idea). Not because Swensen’s a bad guy—by all accounts he’s a great guy, and a brilliant investor. But so many less-talented endowment and pension fund managers tried to emulate his alternative-investments-heavy approach in recent years that they helped create a bubble in alternative investments (hedge funds and private equity, mainly).

Anyway, my friend Marc Gunther, who wrote a great profile of Swensen for Yale’s alumni magazine five years ago (Marcia Vickers also wrote a great one for Fortune around the same time that I sorta kinda helped edit) , has a new Q&A with the man. It’s in the Yale Alumni Magazine again, which helps explain why it fails to delve into the important question of whether Swensen is in fact one of the 25 people to blame for the financial crisis. But it’s still very interesting. The mild-mannered Swensen bashes Jim Cramer (a Harvard man, natch):

Jim Cramer exemplifies everything that’s wrong with the advice — and I put advice in quotation marks — that is given to individual investors. Investing is a serious business. We’re talking about retirement security of American citizens, and he turns it into a game. It’s a game where his listeners lose. It’s ridiculous. These high-turnover, rapid trading strategies enrich the brokers. If you look at Jim Cramer’s approach on an after-fee, after-tax basis, the individual doesn’t have a chance.

And the man who invented the swap in his pre-Yale days at Salomon Brothers also says complex debt securities are for suckers (apparently he’s been saying this for a while):

People on Wall Street who are structuring these securities are more sophisticated than the people to whom they are selling them. With that kind of dynamic, when really smart, highly compensated, very clever people are on one side of the trade, and less highly compensated, less clever people are on the other side, you know who’s going to end up in the soup.

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