David Weisburd

And then as the capital call comes in, you're transferring out of that asset.

In this denominator effect, essentially public markets go down, your private markets on a percentage basis are now a larger part of your portfolio.

Why not just under-allocate to private markets ahead of this, knowing that there'll be this drawdown in the next 10 years?

Or what other tools do you have to solve for that?

It's interesting because a lot of this actually comes down to the least sexy, most important thing in investing, governance.

which is what's upstream of all your decisions.

And the best endowments I talked to, which I think are the best private investors, they give their investment committee ranges versus specific numbers.

So they don't allow themselves to optimize on arbitrary asset allocation numbers that keep them from this flexibility.

I interviewed Brent Beshore, who has this really interesting 30-year private equity fund, and he predicts every decade there's going to be some black swan event.

Yeah, the 10-person IC, there's always that one bad apple, especially when the market's down 20%.

It only takes one panicked IC member to destroy the entire investment policy.

Instead of ruining that, you have to really think from the corporate governance side.

And I think

Few institutions have really gotten this right, like Alaska Permanent, URS, Utah Retirement Systems.

And instead of sitting around hoping that human nature won't surface its ugly head again, they created these governance awaiting this kind of next crisis and making sure that the investment team itself is able to navigate some of these difficult times without kind of being captured by the IC.

What's some of the best practices that it comes to families that are looking to preserve their wealth over several generations?

What are some governance principles that they could institute in order to avoid what I would call the nepo baby or other issues that might come downstream?

Not that it ever happens, but just theoretically speaking.

Hypothetically.

But having governing docs is- If you've been considering futures tradings, now might be the time to take a closer look.