📖David Swensen
Quality Business Criteria
Quality businesses compound wealth and reduce risk.
Invest in businesses with durable competitive advantages, strong cash flows, and management integrity. Quality businesses compound wealth over time and reduce downside risk.
🏠 Everyday Analogy
📖 Core Interpretation
David Swensen emphasizes durable business quality over short-term noise. A strong model, real competitive edge, and disciplined capital allocation matter more than quarterly excitement.
💎 Key Insight：Durable advantages and good management create superior returns.
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❓ Why It Matters
Without business-quality filters, investors drift toward stories rather than economics. Durable cash generation is what supports long-term valuation.
🎯 How to Practice
Use a checklist covering moat, management, unit economics, and capital allocation; track long-term cash generation instead of quarter-to-quarter noise.
⚠️ Common Pitfalls
Buying narratives instead of cash-generating economics
Overreacting to short-term operating noise
Ignoring management quality and capital allocation
📚 Case Studies
1
Dot‑Com Bust and Diversified Equity Exposure (2000)
Tech and growth stocks collapsed after the late‑1990s bubble, while broad value, international, and small‑cap exposures fared better.
✨ Outcome：Avoided concentrated tech bets, kept diversified long‑term allocations, and benefited as non‑bubble equities and later markets recovered.
2
Dot-Com Bubble Peak (2000)
Swensen’s Yale endowment policy rebalanced away from soaring U.S. growth stocks into underweighted bonds, real assets, and diversifiers as tech valuations became extreme.
✨ Outcome：Reduced drawdowns in 2000–2002 bear market and preserved capital to buy equities at cheaper prices.
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