4 ms·

comparing endowment to market cap is misunderstanding basic finance and accounting. endowments are more directly (but not perfectly) comparable to (long-term) a

comparing endowment to market cap is misunderstanding basic finance and accounting. endowments are more directly (but not perfectly) comparable to (long-term) assets on the balance sheet. those are typically a small fraction of the market cap of a company. apple, for instance, has a $2.4T market cap, but it's non-current assets are $216B (of which $128B are investment assets).

ajross 4y ago
How so? Universities don't use their endowments like companies use assets either. Assets are returned as dividends or reinvested. University endowments are for income. If anything they under perform the returns that the broader market would use to assign a market cap. A public company with a total revenue /budget of Harvard's would have a market cap rather less than the endowment size. I'm still not understanding what the problem with these endowments is, except that they represent money in the hands of people you personally dislike.
- clairity 4y ago
  > "Assets are returned as dividends or reinvested." see, you did it again. assets are almost never "returned" anywhere. that's typically profits. you don't need an mba, but to have any credibility, you need to at least use these words reasonably. in a capital structure, endowments are most similar to (long-term) assets, not revenue, income, or market cap (which is a valuation). i'll leave it as an exercise to work out why.
  - ajross 4y ago
    Good grief, you know perfectly well I meant liquid assets, c.f. the number you cited for Apple. I'm not talking about factories and capital goods, and you know that. The term as you used it is ambiguous[1], but I engaged in exactly the frame you used on the assumption that you'd interpret it in good faith. This kind of nitpickery isn't winning, it's just deflection. So deflect away. But you know perfectly well that Harvard University isn't 1/4 the size of Apple Computer. [1] c.f. your own qualification when you had to say "(long term) assets"! Needless to say that Apple number you quoted wasn't an accounting of any kind of long term investment. It was cash!
    - clairity 4y ago
      you keep making the same mistake. it's really easy to look up the balance sheet of apple online, and then look up the line item terms on investopedia (hint: "non-current assets"). luckily it's a random internet board and not a work meeting or something.

ajross 4y ago

How so? Universities don't use their endowments like companies use assets either. Assets are returned as dividends or reinvested. University endowments are for income. If anything they under perform the returns that the broader market would use to assign a market cap. A public company with a total revenue /budget of Harvard's would have a market cap rather less than the endowment size. I'm still not understanding what the problem with these endowments is, except that they represent money in the hands of people you personally dislike.

clairity 4y ago
> "Assets are returned as dividends or reinvested." see, you did it again. assets are almost never "returned" anywhere. that's typically profits. you don't need an mba, but to have any credibility, you need to at least use these words reasonably. in a capital structure, endowments are most similar to (long-term) assets, not revenue, income, or market cap (which is a valuation). i'll leave it as an exercise to work out why.
- ajross 4y ago
  Good grief, you know perfectly well I meant liquid assets, c.f. the number you cited for Apple. I'm not talking about factories and capital goods, and you know that. The term as you used it is ambiguous[1], but I engaged in exactly the frame you used on the assumption that you'd interpret it in good faith. This kind of nitpickery isn't winning, it's just deflection. So deflect away. But you know perfectly well that Harvard University isn't 1/4 the size of Apple Computer. [1] c.f. your own qualification when you had to say "(long term) assets"! Needless to say that Apple number you quoted wasn't an accounting of any kind of long term investment. It was cash!
  - clairity 4y ago
    you keep making the same mistake. it's really easy to look up the balance sheet of apple online, and then look up the line item terms on investopedia (hint: "non-current assets"). luckily it's a random internet board and not a work meeting or something.