With exotic strategies and illiquid investments, Princeton registered a 24% loss in 2009, while Cornell took a 26% hit, and Harvard suffered a 27% drop. Compare those losses with the 18% drop for the median large endowment. Worse yet, many such institutions fund their operating expenses with the capital from endowments such as these. If they don't generate capital gains, they may be forced to cut budgets and slash salaries.
Rather than rely on capital gains to sustain our own budgets, we need to seek additional safety in the power of ever-increasing dividend streams. With such a strategy, you'll never have to float debt to avoid whittling down your principal. Princeton only wishes it could say the same.
Source: Motley Fool
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Posted by D4L | Monday, January 03, 2011 | ArticleLinks | 0 comments »________________________________________________________________
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