📖David Swensen
Conservative Valuation Approach
Conservative valuation protects against overpaying.
Use conservative assumptions in your valuation. Optimistic projections lead to overpaying. It is better to underestimate value and be pleasantly surprised than to overestimate and be disappointed.
🏠 Everyday Analogy
📖 Core Interpretation
In Conservative Valuation Approach, David Swensen focuses on the gap between price and value. Returns come from paying less than what a business is worth, not from guessing short-term market moves.
💎 Key Insight：Pessimistic estimates create a built-in margin of safety.
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❓ Why It Matters
Ignoring valuation turns even good companies into poor investments. Overpaying compresses future returns and leaves little margin when assumptions are wrong.
🎯 How to Practice
Estimate intrinsic value with conservative assumptions, set clear buy ranges, and act only when price offers a meaningful discount with acceptable downside.
⚠️ Common Pitfalls
Confusing a low price with true cheapness
Using one metric without business context
Overly optimistic assumptions that erase margin of safety
📚 Case Studies
1
Global Financial Crisis (2008)
As equities and illiquid assets plunged, Swensen’s disciplined rebalancing shifted funds from Treasuries and bonds back into depressed equities and alternative assets despite market panic.
✨ Outcome：Positioned the endowment for strong post-2009 recovery, outperforming many peers that de-risked near the bottom.
2
Tech Bubble Resistance (2000)
Amid the dot-com boom, Swensen refused to chase soaring tech stocks, keeping Yale’s portfolio diversified and underweight in high-flying internet names.
✨ Outcome：Avoided the worst of the 2000–2002 crash, preserving capital while many tech-heavy portfolios suffered steep losses.
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