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Sep 9, 2023 · 15m · capital-allocators

WTT: The Real Yale Model

Ted Seides · 13m spoken Narrator / Secondary Voice · 1s spoken
0:00 / 0:00

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Host Ted Seides re-examines David Swenson's foundational writings to deconstruct prevalent industry myths surrounding the Yale Model and highlight the true first principles of institutional portfolio management. Through an analysis of illiquidity, active management, private equity, and rebalancing, Seides emphasizes why blindly mimicking Yale's strategy leads most allocators astray.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 99.9% of the talking time here. How this is scored →

Ted as informed peer 0.0 Guest teaching 0.0 Guest disagreement 0.0 Ted pushing back 0.0
05100:0010:000:05–2:58 · Ted as informed peer 0/10 Re-evaluating David Swenson and the Yale Model Ted Seides delivers a solo essay reading re-evaluating David Swensen's Pioneering Portfolio Management. Because this is a monologue presentation without an interactive guest dynamic, all conversational power dynamic scores are 0.2:59–7:34 · Ted as informed peer 0/10 Swenson's Warnings on Institutional Obstacles Ted continues reading his blog post detailing Swensen's warnings regarding institutional obstacles and the nuances of illiquidity. As a solo scripted reading, there is no back-and-forth dialogue.7:37–10:03 · Ted as informed peer 0/10 Debunking the Myth of Asset Allocation as Return Driver Ted addresses asset allocation and active management myths with a secondary voice providing brief scripted rhetorical emphasis ('It is not' and 'He did not'). There is no genuine debate, confrontation, or interactive exchange.10:06–12:46 · Ted as informed peer 0/10 The Harsh Realities of Private Equity and Venture Capital Ted reads through Swensen's critical views on private equity, venture capital, and rebalancing. As an uninterrupted monologue, all interaction metrics remain at zero.12:48–15:04 · Ted as informed peer 0/10 Swenson's Lasting Legacy and Modern Disciples Ted reflects on Swensen's broader legacy and highlights modern disciples like Andy Golden and Seth Alexander. This is purely reflective monologue without host-guest friction.15:05–15:26 · Ted as informed peer 0/10 Podcast Conclusion and Capital Allocators Resources Standard outro and housekeeping segment directing listeners to the Capital Allocators website.0:05–2:58 · Guest teaching 0/10 Re-evaluating David Swenson and the Yale Model Ted Seides delivers a solo essay reading re-evaluating David Swensen's Pioneering Portfolio Management. Because this is a monologue presentation without an interactive guest dynamic, all conversational power dynamic scores are 0.2:59–7:34 · Guest teaching 0/10 Swenson's Warnings on Institutional Obstacles Ted continues reading his blog post detailing Swensen's warnings regarding institutional obstacles and the nuances of illiquidity. As a solo scripted reading, there is no back-and-forth dialogue.7:37–10:03 · Guest teaching 0/10 Debunking the Myth of Asset Allocation as Return Driver Ted addresses asset allocation and active management myths with a secondary voice providing brief scripted rhetorical emphasis ('It is not' and 'He did not'). There is no genuine debate, confrontation, or interactive exchange.10:06–12:46 · Guest teaching 0/10 The Harsh Realities of Private Equity and Venture Capital Ted reads through Swensen's critical views on private equity, venture capital, and rebalancing. As an uninterrupted monologue, all interaction metrics remain at zero.12:48–15:04 · Guest teaching 0/10 Swenson's Lasting Legacy and Modern Disciples Ted reflects on Swensen's broader legacy and highlights modern disciples like Andy Golden and Seth Alexander. This is purely reflective monologue without host-guest friction.15:05–15:26 · Guest teaching 0/10 Podcast Conclusion and Capital Allocators Resources Standard outro and housekeeping segment directing listeners to the Capital Allocators website.0:05–2:58 · Guest disagreement 0/10 Re-evaluating David Swenson and the Yale Model Ted Seides delivers a solo essay reading re-evaluating David Swensen's Pioneering Portfolio Management. Because this is a monologue presentation without an interactive guest dynamic, all conversational power dynamic scores are 0.2:59–7:34 · Guest disagreement 0/10 Swenson's Warnings on Institutional Obstacles Ted continues reading his blog post detailing Swensen's warnings regarding institutional obstacles and the nuances of illiquidity. As a solo scripted reading, there is no back-and-forth dialogue.7:37–10:03 · Guest disagreement 0/10 Debunking the Myth of Asset Allocation as Return Driver Ted addresses asset allocation and active management myths with a secondary voice providing brief scripted rhetorical emphasis ('It is not' and 'He did not'). There is no genuine debate, confrontation, or interactive exchange.10:06–12:46 · Guest disagreement 0/10 The Harsh Realities of Private Equity and Venture Capital Ted reads through Swensen's critical views on private equity, venture capital, and rebalancing. As an uninterrupted monologue, all interaction metrics remain at zero.12:48–15:04 · Guest disagreement 0/10 Swenson's Lasting Legacy and Modern Disciples Ted reflects on Swensen's broader legacy and highlights modern disciples like Andy Golden and Seth Alexander. This is purely reflective monologue without host-guest friction.15:05–15:26 · Guest disagreement 0/10 Podcast Conclusion and Capital Allocators Resources Standard outro and housekeeping segment directing listeners to the Capital Allocators website.0:05–2:58 · Ted pushing back 0/10 Re-evaluating David Swenson and the Yale Model Ted Seides delivers a solo essay reading re-evaluating David Swensen's Pioneering Portfolio Management. Because this is a monologue presentation without an interactive guest dynamic, all conversational power dynamic scores are 0.2:59–7:34 · Ted pushing back 0/10 Swenson's Warnings on Institutional Obstacles Ted continues reading his blog post detailing Swensen's warnings regarding institutional obstacles and the nuances of illiquidity. As a solo scripted reading, there is no back-and-forth dialogue.7:37–10:03 · Ted pushing back 0/10 Debunking the Myth of Asset Allocation as Return Driver Ted addresses asset allocation and active management myths with a secondary voice providing brief scripted rhetorical emphasis ('It is not' and 'He did not'). There is no genuine debate, confrontation, or interactive exchange.10:06–12:46 · Ted pushing back 0/10 The Harsh Realities of Private Equity and Venture Capital Ted reads through Swensen's critical views on private equity, venture capital, and rebalancing. As an uninterrupted monologue, all interaction metrics remain at zero.12:48–15:04 · Ted pushing back 0/10 Swenson's Lasting Legacy and Modern Disciples Ted reflects on Swensen's broader legacy and highlights modern disciples like Andy Golden and Seth Alexander. This is purely reflective monologue without host-guest friction.15:05–15:26 · Ted pushing back 0/10 Podcast Conclusion and Capital Allocators Resources Standard outro and housekeeping segment directing listeners to the Capital Allocators website.

speaking balance: gold is Ted, purple is the guest (3 minute bins)

0:00 · Ted 100% · guest 0%0:00 · Ted 100% · guest 0%3:00 · Ted 100% · guest 0%3:00 · Ted 100% · guest 0%6:00 · Ted 99.6% · guest 0.4%6:00 · Ted 99.6% · guest 0.4%9:00 · Ted 99.7% · guest 0.3%9:00 · Ted 99.7% · guest 0.3%12:00 · Ted 100% · guest 0%12:00 · Ted 100% · guest 0%15:00 · Ted 100% · guest 0%15:00 · Ted 100% · guest 0%
Sharpest disagreement ▶ 8:13 Scripted rhetorical interjection

In a solo audio essay format without combativeness, the closest stylistic moment is the secondary voice bluntly reading 'It is not' to debunk a widely held market truism.

 Hardest push from Ted ▶ 7:37 Ted pushes back on asset allocation dogma

Ted challenges the conventional industry dogma that asset allocation is the primary forward-looking driver of returns according to Swensen.

 Biggest teaching moment ▶ 9:57 Debunking active management assumptions

The secondary voice and Ted emphasize Swensen's counter-intuitive warning that most institutions will fail at active management.

 Ted holds their own ▶ 3:35 Clarifying the illiquidity misconception

Ted demonstrates deep knowledge of Swensen's text by pointing out illiquidity is not a first principle of the Yale model and only appears on page 82 of the book.
the scores for every segment, with the reasoning behind each
ChapterTopicTed as informed peerGuest teachingGuest disagreementTed pushing backWhy
Re-evaluating David Swenson and the Yale Model 0000 Ted Seides delivers a solo essay reading re-evaluating David Swensen's Pioneering Portfolio Management. Because this is a monologue presentation without an interactive guest dynamic, all conversational power dynamic scores are 0.
Swenson's Warnings on Institutional Obstacles 0000 Ted continues reading his blog post detailing Swensen's warnings regarding institutional obstacles and the nuances of illiquidity. As a solo scripted reading, there is no back-and-forth dialogue.
Debunking the Myth of Asset Allocation as Return Driver 0000 Ted addresses asset allocation and active management myths with a secondary voice providing brief scripted rhetorical emphasis ('It is not' and 'He did not'). There is no genuine debate, confrontation, or interactive exchange.
The Harsh Realities of Private Equity and Venture Capital 0000 Ted reads through Swensen's critical views on private equity, venture capital, and rebalancing. As an uninterrupted monologue, all interaction metrics remain at zero.
Swenson's Lasting Legacy and Modern Disciples 0000 Ted reflects on Swensen's broader legacy and highlights modern disciples like Andy Golden and Seth Alexander. This is purely reflective monologue without host-guest friction.
Podcast Conclusion and Capital Allocators Resources 0000 Standard outro and housekeeping segment directing listeners to the Capital Allocators website.

Statements from this episode (12)

Opinion
Seides: Investors following David Swensen often misinterpret his theory
“Investors following David Swenson too often miss the mark in their interpretation of his theory. Like children playing the game telephone, they listen to other voices and echo beliefs with shakier foundations than Yale's.”
Ted Seides Sep 9, 2023 ▶ 0:34
Insight
Seides: Nearly every aspect of fund management suffers from principal-agent conflicts
“Nearly every aspect of fund management suffers from decisions made in the self-interest of the agents at the expense of the best interest of the principals.”
Ted Seides Sep 9, 2023 ▶ 2:24
Insight
Seides: Active management faces steep obstacles in market efficiency and fees
“Investors hoping to beat the odds by playing the game of active management face daunting obstacles ranging from the efficiency and pricing of most marketable securities to the burden of extraordinary fees in most alternative asset investment vehicles. Success …”
Ted Seides Sep 9, 2023 ▶ 4:18
Insight
Seides: Embracing illiquidity is not a first principle of the Yale Model
“Embracing illiquidity is not a first principle of the Yale model, despite many misinterpreting David's beliefs as such.”
Ted Seides Sep 9, 2023 ▶ 4:59
Opinion
Seides: Illiquid markets are far more efficient today than in the 2000s
“The illiquid markets today are far more efficient than they were in 2000 or 2009 when David published his groundbreaking work.”
Ted Seides Sep 9, 2023 ▶ 7:26
Insight
Seides: Brinson Study Describes Investor Behavior, Not Finance Theory
“The study describes investor behavior, not finance theory. Investor behavior causes policy asset allocation to dominate portfolio returns, since institutions tend to hold stable commitments to a broadly diversified portfolio of marketable securities.”
Ted Seides Sep 9, 2023 ▶ 8:16
Insight
Seides: Asset Allocation Drives Returns Only in the Rearview Mirror
“David was a staunch proponent of asset allocation, but he recognized that asset allocation drives returns in the rearview mirror. If investors choose equities, and equities outperform over time, then asset allocation mathematically dominates long-term return a…”
Ted Seides Sep 9, 2023 ▶ 8:34
Insight
Swensen: Private Equity Fee Burden Almost Guarantees Disappointing Returns
“He said, while illiquid markets provide a much greater range of mispriced assets, private investors fare little better than their marketable security counterparts, as the extraordinary fee burden typical of private equity funds almost guarantees delivery of di…”
Ted Seides Sep 9, 2023 ▶ 9:35
Assertion Not checkable as stated
Seides: Buyouts underperform public equities after risk and illiquidity adjustments
“He said, in aggregate, buyout investments failed to match public market alternatives. After adjusting for the higher level of risk and the greater degree of illiquidity in buyout transactions, publicly traded equity securities gain a clear advantage.”
Ted Seides Sep 9, 2023 ▶ 10:47
Assertion Not checkable as stated
Seides: Aggregate venture capital returns fail to compensate for risk
“Over reasonably long periods of time, aggregate venture returns more or less match marketable equity returns, indicating the providers of capital fail to receive compensation for the substantial risk inherent in startup investing.”
Ted Seides Sep 9, 2023 ▶ 11:03
Insight
Seides: Private equity offers limited diversification from public markets
“He said, because of the strong fundamental links between private equity investments and marketable securities, private equity provides limited diversification to investors.”
Ted Seides Sep 9, 2023 ▶ 11:27
Insight
Seides: Implementing Swensen's Approach Is as Difficult as Beating the Market
“Internalizing and implementing his approach, however, is as difficult as outperforming the markets.”
Ted Seides Sep 9, 2023 ▶ 12:56
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