What is their Value, Really?

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What is their Value, Really?

In a Sunday Wall Street Journal article on universities’ penchant for investing their endowments in private equity (as opposed to instruments bought and sold on public exchanges, these are bought and sold in private deals between the university and one or another private (i.e., not traded on an exchange) entity, or rarely a private deal to which a publicly traded entity might also agree.

A few exceptionally talented, or lucky, endowment managers seemingly did very well in this environment. Yale’s late David Swensen got an annualized return of 13% over the course of his management.

But how valuable are those investments, really? The WSJ‘s subheadline reads

Universities and other institutions have built up large private-equity holdings, but they are now lagging behind the S&P 500 and aren’t easy to shed

And this:

And much of what those funds earned for their investors in that time was on paper; endowments and other institutions were getting less and less cash that they could put to work in the booming stock market.

And this [emphasis added]:

…making it hard for managers to get the prices they want for the companies in their portfolios. Meanwhile, institutions have struggled to find investments that hedge against stocks and private equity without further eroding returns—and the problem has gotten worse with the stock market’s latest rally.

The value of any investment is what someone is willing to pay to get it. The initial value of those private equity investments in these endowments is what the endowment managers paid to get the private entity or a piece of it. Now they’re moving to sell some/most/all of these privately held pieces, but there are few to no buyers at those initial prices or anywhere near those prices.

This is Yale’s continued position:

Yale said in a statement that it remains committed to its private-markets strategy. “We trust that sophisticated investors, especially our partners who know us best, understand this,” the school said.

That sounds like the typical arrogance of Know Betters.

What is, in the end, the true value of those privately held pieces? It’s still whatever a buyer is willing to pay for them. And that calls into question two things: an accurate valuation of those entities and the wisdom of relying so heavily on non-publicly traded entities for endowment investments.

Former Yale endowment private-equity manager Tim Sullivan:

One of the reasons we hire these guys is because they know when’s the right time to sell an asset[.]

The problem here is that a potential buyer won’t necessarily agree that it’s the right time to buy that asset.

It’s tough to grow, or even just to maintain the value of, an endowment based on phantom valuations of its holdings.

When You Don’t Know the Difference between Man and Woman

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Be loud and proud about it. Minnesota Progressive-Democratic Party Senator Amy Klobuchar referred to the Minneapolis Annunciation Catholic School mass shooter as “he” in her remarks about the event. On this, Klobuchar was entirely correct.

Court records show [the shooter] legally changed names from Robert to Robin in 2019. A court form, filled by a person believed to be the shooter’s mother, Mary Grace Westman, said, “Minor child [redacted] identifies as a female and wants her name to reflect that identification.”

That’s not stopping NPR from pushing its ignorance at the top of its lungs. NPR host Ailsa Chang:

And just a point of clarification, Senator Klobuchar referenced the shooter as “he.” Although police have identified a suspect, it’s still unclear at this time what that person’s gender is or how they identify.

The shooter is male because that’s how he started life, and that’s how his genetics identify him. Choosing to self-identify otherwise changes nothing about his biology; it affects only his chosen life style.

A side note, too, since Chang apparently has forgotten her grade school American English grammar lessons. There’s only one shooter in the present case. The grammatically correct pronoun here is not the plural “they,” but the singular “he.”

There’s a reason NPR is losing its Federal funding.

The Core of the Progressive-Democratic Party

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It’s moving ever closer to Party’s grass roots. The face of that core is Progressive-Democratic Party New York City Mayoral candidate Zohran Mamdani and his parallel membership in Democratic Socialists of America. DSA’s core position is

“dismantle and move beyond” America’s capitalist society and create a “wholesale socialist transformation of our national and global economy.”

DSA’s platform is specific, too, including such nakedly socialist things as these:

  • city-run grocery stores
  • free bus rides
  • increased public funding for hormone therapy and surgery for transgender people
  • rent freeze, not just rent control
  • ending “all misdemeanor offenses”

It’s not just Mamdani, either. The Progressive-Democratic Party selected its own socialist candidate for mayor of Minneapolis, Omar Fateh, who is a carbon copy of Mamdani. It’s true enough that Party then unendorsed (leaving him on the ballot) Fateh, but only on a technicality regarding their convention nominating process and only in response to some opprobrium. But here, Party spoke their truth in selecting Fateh and now only is covering its political behind.

In the end, the two, these most public two, are simply concretizing prior Party commitments: then-Progressive-Democratic Party Presidential candidate Barack Obama’s brag just prior to his first election that he was just “days away from fundamentally transforming” our nation, and then-Progressive-Democratic Party President Joe Biden in his State of the Union address saying that he intended to “fundamentally change” our nation’s economy.

This is Party initially acting at the national level and now trying to move down into our cities.

Some Labor Day Questions

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First published in 2015, I’ve updated it for today.  In an ideal world, I’ll be able to update it again next year, with a yet more optimistic tone.

The Wall Street Journal asked some questions on Labor Day 2012, and supplied some answers.  Here are some of those questions and answers, which remain as valid this Labor Day.

  • Q: How are America’s workers doing? Not good. Over the past decade, over the ups and downs of the economy, taking inflation into account, the compensation of the typical worker — wages and benefits—basically haven’t risen at all. … The Labor Department recently said that 6.1 million workers in 2009-2011 have lost jobs that they’d had for at least three years. Of those, 45% hadn’t found work as of January 2012. … Federal Reserve Chairman Ben Bernanke said Friday that unemployment is still two percentage points higher than normal….
  • Q: Things ARE getting better, though. The US economy is creating jobs, right? Back in December 2007 when the recession began, there were about two jobless workers for every job opening.  When the economy touched bottom in mid-2009, there were more than six unemployed for every job.  At last count, the BLS says there were 3.4 jobless for every opening.
  • Q: How much of this elevated unemployment is because the unemployed just don’t have the skills that employers are looking for right now?  …the bulk of the evidence is a lot of the unemployment really is the old-fashioned kind: the kind that would go away if the economy was growing at a stronger pace. Mr. Bernanke said as much at the [2012] Jackson Hole conference….

In 2019, the jobs situation was drastically improved.  The overall unemployment rate was at an historic low, and there were more job openings than there were folks to fill them.  The black unemployment rate was at a record low.  The Hispanic unemployment rate was at a near record low.  The women unemployment rate was at a near record low.  Wages, both real and nominal, were growing.

The Wuhan Virus Situation severely damaged that, but by late 2020, our economy was in rapid recovery, GDP was up sharply, folks were getting jobs again, and inflation still was at an historic low despite that heating up economy.

We have today (2025) a new factor, recently and sharply risen, the plethora of Artificial Intelligence packages (eliding here the lack of actual intelligence in the packages; in fact they’re very good at teasing out patterns from very noisy inputs, but only those patterns their human programmers have programmed them to see). These packages have use in supporting research by those researchers with the professionalism and personal discipline to thoroughly check their AIs’ output rather than blindly accepting it, and the packages are very good at simple, rote work—the very entry level work that teenagers and newly graduated college students need in order to get started on their own careers. The actual impact of AI is not yet visible.

We now have a little high, if slowing inflation, and the necessities of life: food, shelter, energy for heating/cooling our shelter, and fuel for getting to work remain priced well above what they were those nearly four years ago, with real wages lower than they were then, even if that gap is slowly closing.

Labor Day is here, and this time around, it represents the traditional beginning of the mid-term election campaign season and of the newly structured Presidential election campaign season. The question before us now is which of the two parties and administrations currently on offer offers the better plan for getting us out of this lingering doldrum, reducing the far too high violent (and not so violent) crime rates in our cities, getting our spending and borrowing under control, and getting our immigration system (finally) right—the one that wants reduced regulation and smaller government or the one that sees government as the answer to our problems and wants to grow it commensurately?

Happy Labor Day.

A Weakness in Good People

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A letter writer in Thursday’s Letters section of The Wall Street Journal is deeply along the right track.

The most reliable way to understand dictators’ thoughts is to read their own writing…. From Lenin’s “What Is to Be Done?” (1902) to Hitler’s “Mein Kampf” (1925) and Mao’s “On New Democracy” (1940), the blueprints for conquest are there in black and white. So it is with Vladimir Putin’s essay “On the Historical Unity of Russians and Ukrainians” (2021).

Add Stalin to that, and there are a host of others in recent and distant history. A weakness that good people have, though, is that having read those dictators’ words, as many of us (most of us, at least of some of them?) have, too many of us don’t believe they really mean it—they’re just exaggerating for effect, or they’re too mad to be taken seriously, or…any excuse to dismiss avert our eyes will do.

It is a serious weakness: good people have an extremely difficult—often fatal—time believing the depth of evil and depravity that exists in dictators and especially of their willingness and intent on acting on their written intensions.

It’s necessary to take them at their word. And then to take the necessary next step: hold them to their word and move sternly to preempt them. And where preemption fails, to counter them decisively and totally, as we finally did in eradicating Nazi Germany and fascist Japan and Italy, remaking those nations as friendly to and respective of their neighbors.