David Weisburd

Perhaps this is a very dumb question, but when these funds, these difficult to access funds, when they fill out their next fund, everybody essentially starts at their pro rata stake and then people move at the edges?

Generally, yes.

You mentioned something really interesting, which is you prepare for the crisis ahead of the crisis.

Outside of budgeting, is there a psychological aspect to this?

Do you believe there's this self-fulfilling prophecy for endowments where as you get better returns, you start to think more long-term and you get even better returns?

I found this in my own portfolio.

The more further away I get from zero, the more I'm able to think rationally versus emotionally.

I'm able to think more long-term.

I heard an interview with Stanley Drunkenmiller, arguably one of the greatest traders of all time, and he said, nothing feels as cheap as when it's gone up 40%.

And when I heard that one of the greatest traders in the world suffers from this kind of momentum bias, I realized that is really about structuring your portfolio the right way, not trying to outsmart this mammalian brain that we have.

I will probably borrow that comment in the future.

One of the things that I'm really trying to dig deep into is the sources of alpha in endowment portfolios.

People talk about alpha as if it's this regular thing, you just walk down the street and you have alpha to the right, alpha to the left.

In my opinion, alpha is extremely scarce and only in very certain places within the investment universe.

For endowments that are looking to generate alpha, not just beta and not just be lucky in terms of market fluctuations,

Where should they look?

My mental model is when it comes to picking managers, you should almost discount IQ.

Everybody's top 1% and some are top 0.1% storyteller.

And that's where a lot of people, that's kind of the trap is like somebody that could tell a good story and really focus on supply and demand dynamics.

Even if you're the smallest investor in the world, even if you're investing $25,000 through an RIA, you still should be looking at the supply and demand dynamics of that specific industry.