The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 49 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 0 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
Golden: In investing, theory can outweigh conflicting empirical data
“Being able to have an appreciation of theory over data in the right bounds is key. You know, there are times when you want to say, if the data don't support the theory, the data are wrong, right?”
Golden: Since 2009, there has been an active cost to portfolio diversification
“It's still, you know, since 2009, the frustration has still been that not just zero return to diversification, there's been a cost to diversification, but there's also been a cost to hard work.”
PRINCO entered the 2020 crisis with a significant bet against US stocks
“We had also not done that evenly and had a fairly significant bet against the US stock market. Which was helpful in March.”
Golden in April 2020: China is the least troubled financial market
“China is the least troubled area in terms of markets right now.”
Dislocation drawdown vehicles force allocators to suboptimize their portfolios
“I have long been frustrated by a trend among Marketable managers to create drawdown vehicles to be used in market dislocations because it causes us to suboptimize our portfolio.”
Golden: Performance attribution studies are rarely worth the paper they're written on
“You know, attribution studies tend not to be worth the paper they're written on, and I believe or not can go on long about that.”
Golden: PRINCO allocates 4% of the endowment to a single equity manager
“Within domestic equity, we've got 40% of that 10%. Your listeners can do the math. It's about four points with just one manager, right?”
Golden: Most institutions suffer from over-diversification rather than concentration
“I think most institutions are much more prone to over-diversification or its cousin de-worsification, as Pierre Lynch would say than they are the opposite issue.”
Golden: PRINCO wouldn't invest in hedge funds for median returns
“If we were condemned to produce the median return of the hedge fund space, there's I don't think we'd have any allocation.”
Golden: LPs should optimize private equity fees, not just minimize them
“On the specific point about fees, we believe it's important to optimize fees, not minimize fees. And we want to make sure that the firms actually have, you know, revenues to the principles that are enough to make them silly rich without having to find some oth…”
Golden: Base management fees should not create major wealth for fund managers
“Base level fees really should not be the source of major wealth.”
Golden: Lateral investment hires often fail to adapt beyond fixed recipes
“And what we're really looking for are first principle thinkers as opposed to learn a recipe and just use that recipe, which is one of the reasons why it's often difficult to bring the lateral higher in because they've got a certain way of doing it, and it's ha…”
Golden: Rotating devil's advocate processes sound better than they actually work
“Process of that rotating assigned devil's advocate sounds a whole lot better than it actually is. We still haven't cracked the code as to how they're really implemented”
Golden: Over half of PRINCO's worst investment decisions involved political friction
“I only got to about number seven or eight when I realized that more than half of them shared this characteristic of there was some kind of political element”
Golden: Quantitative manager selection fails because return engines do not stay stable
“You can't get enough data to base a decision without, you know, running afoul of a key premise, which is that the engine that produced that is stable, right? And that nothing's changed.”
Golden: PRINCO holds heavy China exposure but hedges RMB currency risk
“We've got, if you were to dig deep enough, you would say, oh, I bet you they've got a lot of investment in China.
Yeah, we do.
And so maybe we want to take that RMB exposure down a little bit, because that's something you could imagine having, you know, a real…”
Andy Golden: Backing managers everyone roots for creates true force multiplication
“We want to work with people that we know that everyone who meets them is going to root for them, because that's where you'll really get the force multiplication.”
Golden: Early COVID-19 volatility surpassed the 2008 Lehman Brothers collapse
“During what I think is objectively the most volatile markets in my career, even compared to the Lehman days, you gotta understand Is there anything particularly unusual going on?”
Developing internal talent requires showing juniors how decisions are made
“You can only grow your own talent if you don't grow well, at least if they see not just the output of decisions, but see the how the sausage is getting made.”
PRINCO prioritizes post-crisis culture over exploiting immediate market opportunities
“In terms of big worries right now, a surprisingly large share of my worries are not about getting through this crisis, not even about Exploiting as much of the opportunity created by the crisis as possible. It's more about what happens after the crisis and how…”
Investors are likely overconfident about understanding their portfolios during crises
“Like, yeah, you probably are overconfident in your ability to Know what's actually going on in your portfolio, let alone know what's going on in the world.”
Universities must evaluate liquidity holistically rather than isolating the endowment
“One of the lessons that we actually learned as opposed to were reminded of during the global financial crisis was a benefit of looking at liquidity in a unified way across the university. So it's not so much about how we're deploying liquidity within the endow…”
PRINCO paused offensive capital deployment during the early 2020 market crisis
“We're really hitting pause on the offense for now, because it's just so hard to figure out.”
The 2020 crisis may accelerate asset manager adoption of drawdown vehicles
“I think one of the issues that may come out of this current crisis, Is that for those few managers who were willing to just play it more informally, they're going to be processing the advantage that some of those managers with the legal draw had, and it may ac…”
Early 2020 high-quality corporate debt dislocation offered guaranteed multiples
“There was a brief moment where there's such dislocation across high quality corporate debt that had to take precedence of like, because you were pretty much guaranteed a multiple. You didn't know what your IR would be because you didn't know the time.”
PRINCO refuses to back new managers for short-term market opportunities
“And we Have never, and can't imagine we ever would create a new relationship to seize upon an acute opportunity, because then what happens when that opportunity goes away?”
Long-term compounding manager relationships beat short-term high IRR bursts
“For relationships that can compound over a long time into something Really big, even if there's a lower nominal return to that, if you don't have that kind of reinvestment risk, you may want to choose that relationship over something that has more of a burst o…”
Allocators avoid offbeat strategies when traditional assets are cheap
“I think it's also interesting that the really kind of off the beaten path investments, like a Sports betting fund. That's interesting that you would think that I would think that what I need right now, when very traditional things are on sale, is to go far afi…”
Golden: A single volunteer directed Princeton's portfolio for decades
“And for decades, there had basically been a single volunteer who made security level decisions.”
Golden: I originally proposed a Yale-style committee governance model
“It was really unusual, and in fact, was not what I originally proposed. I said to Ed, I don't want to reinvent things when there's a good model. You know, here's a kind of Yale-like model where the major decisions, manager hires, fund re-ups, would still flow …”
Golden: Knowledgeable investment boards enable allocators to take contrarian pain
“It means that you got to be contrarian, and it means that you got to be able to do some uncomfortable things. And people who understand what you're doing will allow you greater units of discomfort, and they will also allow you to optimize that discomfort spend…”
Golden: True time horizon is enduring discomfort without changing course
“But the real horizon is not what you claim your horizon is. The real horizon is this thing that you maybe don't even discover until after the fact. It's how long Can you go with a large amount of discomfort without changing your path inappropriately?”
Golden: Managers develop bad agency habits when things go well, not badly
“People tend to develop bad habits when things are going well, in terms of separating interests with clients, not when things are going badly”
Golden: PRINCO avoids black-box and discretionary market-feel trading strategies
“It's one of the reasons why there's a bunch of strategies that we don't invest in, even though others have made a ton of money. But we know that when the bad times come, we would not be able to do anything to give us confidence to continue... You know, any bla…”
Golden: PRINCO targets 25% private equity, 25% hedge funds, 19% real assets
“If we just kind of go around the pie chart, it's 10% dedicated to domestic equity, long-only managers, six percent to other developed markets, long-ish only managers, 10% to emerging market public equity managers, 25% in the category we call independent return…”
Golden: PRINCO's top equity manager focuses on fallen angel biotech stocks
“These guys you know, who many of our closest friends invest with them do biotech stocks, fallen angel biotech stocks. So you're not just concentrating, you're concentrating on, you know, a sector that can be quite volatile, that is pretty distinctive.”
Golden: PRINCO relies almost entirely on hiring undergraduates directly from college
“But where we think the future of PRINCO is, is mostly, if not entirely, on our grow our own. And so we're hiring one to three or maybe more kids out of college, primarily Princeton, where we have some unfair recruiting advantages.”
Golden: Manager selection matters more than timing or specific strategy
“We believe that who matters a whole lot more than
When you invest, and may even matter more than what they actually do.”
Golden: Early career advice should be to follow your like, not passion
“There's a cliche about following your passion. I feel that it's true, except for I want to modify that and say, follow your like. The problem with telling someone follow your passion is it presupposes that they know what passion is, and, you know, it's almost …”
Golden: Not everything worth doing is worth doing really well
“And also, it turns out that not everything worth doing is worth doing really well. There's some, you know, you kind of want to spend your effort budget wisely. You know, there are some things where good enough is actually good enough.”
PRINCO requires every investment team member to record advance votes
“Every time we have a major decision, we move the entire investment team from the room we normally sit in to a board-like room. And everyone, even if they're in their first week, they're a twenty-year-old fresh out of college, attends that meeting and has to wr…”
Over half of Princeton's portfolio is in non-marketable investments
“About half, more than half the portfolio is in non-marketable investments, and you got already this underweight in the US, so you can only underweight so much.”
Princeton built emergency liquidity reserves outside its endowment post-GFC
“The intersection is that coming out of the global funders crisis, the university explicitly built up a little bit of reserve outside the endowment for liquidity, so that in a kind of Break glass situation, then we could defer some spending coming out of the en…”
Allocators must pace crisis deployments like a buffet line
“The analogy that We've often used in trying to describe it to ourselves, also to our managers as, hey, it's a buffet line, right? And you got a plate and you don't want to fill up your plate too early because often the lobsters at the end, they start out with …”
It is too late to build partnerships and culture during a crisis
“I think it's a reminder that by the time a crisis hits, it's too late to develop partnerships, to develop the right culture.”
Golden: Swensen helped secure a Princeton offer triple my Yale pay
“Dave Swenson, I asked for his help, and he got me an offer to come to Princeton for triple my compensation. I got my own offer to go to Duke, my alma mater, undergrad, for double, so I took the Duke job”
Golden: PRINCO concentrates independent returns across roughly 15 manager relationships
“Our opinion of the asset class is quite different, if you want to call it an asset class, opinion of, you know, the, that collection of managers is quite different from the opinion of our 15 or so relationships that we have there.”
Golden: PRINCO mandates blind pre- and post-meeting voting on all investments
“By the way, everyone walks in the room, the first thing they do is they get a ballot, and they have to say what their vote is going into the meeting, and then at the end of the meeting, they write down what their vote is, and then that piece of paper is set as…”