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Wise Money: Using the Endowment Investment Approach to Minimize Volatility and Increase Control by Daniel Wildermuth

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5Recognizing Opportunity

THE ENDOWMENT MODEL AND THE MORE TRADITIONAL investment strategies differ in several key respects. The first two differences—namely, that the endowment model has more uncor-related, performance-oriented assets and a reduced emphasis on bonds—are quite easy to understand.

A couple of other issues aren’t quite as obvious. First, endowments purposely include illiquid alternative investments, which are thought to present unique opportunities. I feel these assets can also benefit individual investors. Second, I believe endowments plan with very different assumptions than individual investors have, particularly in regard to future stock market returns. Similarly, individual investors likely would benefit from more clearly identifying ...

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