📖David Swensen
Emotional Discipline in Markets
Exploit market emotions rather than being controlled by them.
Markets are driven by fear and greed. The disciplined investor exploits these emotions rather than being controlled by them. Emotional control is the key competitive advantage.
🏠 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：Emotional control is the key competitive advantage.
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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
Endowment Through the Global Financial Crisis (2008)
The Yale model, heavy in illiquid alternatives like private equity, real assets, and hedge funds, faced severe short‑term stress as markets and liquidity conditions collapsed.
✨ Outcome：Although the endowment declined sharply in 2009, alternatives recovered strongly over subsequent years, outperforming traditional 60/40 portfolios.
2
Yale Endowment Tech Bubble Avoidance (2000)
Swensen’s disciplined manager selection led Yale to avoid many momentum-driven tech managers during the dot-com bubble.
✨ Outcome：When the bubble burst, Yale’s portfolio declined far less than peers, reinforcing the value of careful manager vetting and long-term discipline.
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