📖David Swensen
Crowd Behavior Awareness
Act when the crowd is at emotional extremes.
Understanding crowd psychology is essential. When everyone agrees, the opportunity has usually passed. The best time to act is when the crowd is most fearful or most confident.
🏠 Everyday Analogy
📖 Core Interpretation
David Swensen highlights that many investment mistakes are psychological, not analytical. Managing behavior under stress is as important as finding ideas.
💎 Key Insight：Crowd consensus signals exhausted opportunities.
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❓ Why It Matters
In volatile markets, fear and greed push investors to buy high and sell low. A behavioral framework reduces avoidable, self-inflicted errors.
🎯 How to Practice
Pre-write decision rules, slow down trades during stress, and separate market emotion from business facts before adjusting positions.
⚠️ Common Pitfalls
Following crowd emotion at extremes
Mistaking confidence for certainty
Forcing trades to quickly recover losses
📚 Case Studies
1
Sticking with Illiquid Assets (2008)
During the global financial crisis, private equity and real assets became illiquid and unpopular, but Swensen maintained Yale’s heavy allocation instead of selling at distressed prices.
✨ Outcome：These assets recovered strongly in subsequent years, contributing significantly to Yale’s long-term outperformance.
2
Yale Endowment and Illiquid Alternatives (2000)
Swensen increased Yale’s allocation to private equity and venture capital, aligning with long-horizon, equity-oriented partners whose compensation depended on long‑term results, not asset gathering.
✨ Outcome：Generated superior risk‑adjusted returns versus traditional 60/40 portfolios over the following decades.
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