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Ivy League All-Star Investment Team: At Point Guard, Jeremy Lin

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Familiar with Linsanity? The ‘Linderella’ story of New York Knicks point guard—and Harvard University graduate Jeremy Lin—has entranced millions of basketball and non-basketball fans beyond the New York metropolitan area, beyond the Asian-American market and beyond the NBA subculture.

One of the key points of fan interest in Lin is not simply that his parents emigrated from Taiwan or that he’s upfront about his religious beliefs. No, it’s that he has had a run of athletic triumph as a Harvard grad, for goodness sake.

Yes, seven U.S. presidents have come from Harvard, but when considering the products of the eight Ivy League schools, world-class athletes are not what first comes to mind, despite the athletic prowess of folks like Bill Bradley (Princeton), Calvin Hill (Yale) and Lou Gehrig (Columbia). What does come to mind is excellence in academics, and particularly in the investment arena.

Investment advisors are often called “quarterbacks,” but we would argue that a better metaphor would be as Lin’s position with the Knicks: point guard. After all, just like an advisor, a point guard’s main goal isn’t necessarily to be the highest scorer, but to call the plays and deliver the ball equally to those high scorers. Think of a point guard as an asset allocator, distributing the client’s investment-dollar passes to those with special skills in defense (fixed income), offense (returns) and even the three-point outside shooter who can add alpha points when the team (the client) needs a non-correlating performer (think alternative investments).

So we present for your consideration what we humbly think could be an investment all-star team from the Ivies, highlighting some graduates and academics from the eight Ivy League schools whom you’d want on your investment team. We also took a look at how well their endowments are performing (sorry, Cornell, but you’ve had a little too much turnover among your endowment CIOs of late to make the team, though the 19.9% return in FY 2011 of the sixth largest Ivy League endowment (numbers courtesy of Forbes), at $5.4 billion, was nothing to be ashamed of).

Click here to see a previous AdvisorOne slideshow listing the Top 10 Largest College Endowments.

Choose next to view the first member of our Ivy all-star team.

Emma Watson in a scene from "Harry Potter and the Deathly Hallows--Part 2" (Photo: AP)The Sixth Man:
Emma Watson
(aka Hermione Gingold of Harry Potter fame)

Okay, the sixth man is a woman, and a wizard (though not a member of the Orlando Magic, to Dwight Howard’s chagrin). But this Brown University undergraduate has shown her mettle in various Quidditch matches where she came off the bench (well, stayed on the bench) at Hogwarts and used her supernatural powers to allow star players Harry Potter and Ron Weasely to score, or defend.

As for Brown’s endowment prowess, Forbes’ Chris Barth reported that for the 12 months ended June 30, 2011, its endowment of $2.5 billion, the smallest among the eight Ivy schools, had a return of 18.5%, placing it next to last among Ivy endowments in performance for the year.

Yale's David Swensen at John Bogle Legacy Forum in New York, 2012.The Shooting Specialist:
David Swensen

Swensen has been chief investment officer for the Yale endowment since 1985. He received his Ph.D. in economics from Yale and teaches at the Yale School of Management. His approach to investing is like a three-point shooting specialist who also is a franchise player: he makes extensive use of alternatives in the endowment portfolio, gathering around him many of the best investment minds in the business to make sure those alternatives perform as advertised. And the Yale endowment has performed remarkably well (see below). He said at the John Bogle Legacy Forum last month that if you don’t have that same kind of investing support, you should stick with the index investing approach made famous by his fellow All-Ivy teammate, center John Bogle.

So how has Swensen and his team performed? For FY 2011, Yale’s $19.4 billion endowment (second in size only to Harvard in the Ivies) grew by 21.9%.

Joe Paterno (Photo: AP)The Coach:
Joe Paterno

Yes, the late JoePa’s halo has been tarnished, but he remains the winningest coach in major college football history. He graduated from Brown University  in 1950 and eschewed a law career for football. Paterno was famous for his old-fashioned ways and his ability to motivate players to work together as a team. His greatest accomplishment was to provide competitive teams year in and year out, becoming a legend in State College for that consistency and leadership—just like you want to be for your clients.

As shown above, Brown had an 18.5% return on its endowment in FY 2011.

Treasury Secretary Tim Geither (Photo: AP)

The Power Forward:
Tim Geithner

When it comes to investing these days, it’s good to have a muscular friend in government who can push aside obstacles. Treasury Secretary Geithner (an 1983 graduate of Dartmouth) not only can work inside the lane, he can also dish it back out to other players, as he helped do with all that stimulus money. Of course, in doing so he could follow the lead of fellow Big Green grad and his predecessor as Treasury Secretary, Hank Paulson (Dartmouth, ’68).

Dartmouth’s endowment, at ‘only’ $3.4 billion, puts it in seventh place among the Ivies; it returned 18.4% in the latest fiscal year.

Jeremy SiegelThe Shooting Guard:
Jeremy Siegel

The professor of finance at Wharton qualifies in several ways for the All-Ivy Investing Team. He did his undergraduate work at Columbia and came to prominence at Wharton, part of the University of Pennsylvania. Siegel does shoot a lot, and sometimes he misses the hole, as some have criticized him for doing so before the tech wreck, but he also scores more than his share of investing and economic points. You want him on your team.

As for the Penn endowment, the fifth largest among its Ivy brethren at $6.5 billion, it returned 18.6% in FY 2011.

John C. Bogle at the Bogle Legacy Forum in New York, 2012.The Center:
John Bogle

John Bogle got interested in the mutual fund business, he recalled at a recent event honoring his legacy, in the Firestone Library at Princeton University in his undergraduate days. His 50-year-old thesis, the basis for a shareholder owned mutual fund company, was included in his 2000 book, John Bogle on Investing: The First 50 Years. Bogle’s index fund approach to investing could/should be the core around which you build a portfolio, so his place on the All-Ivy Investing team is in the pivot.

Burton MalkielHis backup? Burton Malkiel (left), another deep thinker and straight talker who these days is quite bullish in the paint over China, though he’s sometimes whistled for taking random walks toward the basket.  Malkiel teaches at Princeton, where he received his Ph.D., though he received his bachelor’s and MBA degrees from Harvard.

As for Princeton’s $17.1 billion endowment, the third largest in the league, in FY 2011 it earned 21.9%.

Benjamin Graham in 1947. (Photo: AP)The Small Forward:
Benjamin Graham

This basketball position may be a bit shorter than your typical power forward or center, but also needs to be quicker and more inventive. You could do worse than pick for your team Benjamin Graham, who began teaching at Columbia University’s Business School in 1928 (David Dodd, his colleague and collaborator on the seminal 1934 book, Security Analysis, was a Columbia grad and B-school teacher on Morningside Heights as well). Graham and Dodd’s value investing thesis has been followed by such investing luminaries as Warren Buffett, Irving Kahn and thousands of investment advisors over the years.

Columbia’s endowment of $7.8 billion, the fourth largest among the Ivies, was the top performer of all at 23.6% for the year ended June 30, 2011. Compare that, however, to the S&P 500, which returned 30.7% for the year.

Jeremy Lin of the New York Knicks. (Photo: AP)The Point Guard:
Jeremy Lin

Lin has become an overnight sensation by leading the formerly woeful Knicks to a seven-game winning streak, and has scored more points in his first five games than anyone else in the NBA since it merged with the ABA in 1976, including a couple of guys named Michael Jordan and Shaquille O’Neal.

Only a couple of weeks ago, the 2010 graduate of Harvard was facing release from the Knicks and sleeping on his med student brother’s couch on the Lower East Side of Manhattan. The 6’ 3” Lin didn’t receive any scholarship offers after high school, and he went undrafted by the NBA after graduation from Harvard (his degree is in economics).

He’s done it with style but also with a disarming humility. On Tuesday night in Toronto, for instance, Lin hit a three-pointer with 0.5 seconds left to beat the Raptors 90-87. USA Today reported that when he was asked after the game whether he believed what was happening to him, he responded “No. But I believe in an all-powerful and all-knowing God who does miracles.”

Advisors may not perform miracles for their clients, but they do take decisions that make their clients’ lives better and help them achieve their goals. Just like a self-effacing, but talented and energetic, point guard.

Oh, Harvard’s endowment is doing okay, too. It is the largest among the Ivies, at $32 billion, and in FY 2011 it returned 21.4%

Click here to see a previous AdvisorOne slideshow listing the Top 10 Largest College Endowments. 


Top 10 lists from AdvisorOne: