📖David Swensen
Know Your Limits
Stay within your circle of competence.
The most successful investors stay within their circle of competence. Know what you understand well and resist the temptation to venture outside it.
🏠 Everyday Analogy
📖 Core Interpretation
David Swensen advocates a repeatable process: define criteria, execute consistently, and review decisions against evidence. Process quality drives outcome consistency.
💎 Key Insight：Self-awareness about knowledge limits prevents costly mistakes.
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❓ Why It Matters
Without process, there is no reliable feedback loop. Structured execution and review improve decision quality over time.
🎯 How to Practice
Run a decision loop of research, thesis, execution, and post-mortem; document assumptions and update playbooks with evidence, not hindsight bias.
⚠️ Common Pitfalls
Having opinions without execution criteria
Reviewing outcomes but not decisions
Abandoning rules during volatility spikes
📚 Case Studies
1
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.
2
Staying the Course in the Global Financial Crisis (2008)
Equities, REITs, and commodities plunged over 40% while Treasuries and high‑quality bonds rallied, severely testing diversified portfolios.
✨ Outcome：Maintained target allocations and rebalanced into falling assets, leading to strong gains as markets recovered over the following years.
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