Today's episode is the second audio version of my blog.

Three weeks ago, I wrote a piece called Short-Term Gain, Long-Term Pain that described a common

issue with retirement plans, obesity, and climate change.

But I forgot to record it for the podcast.

Since then, we certainly hit a big one, a banking crisis caused in part by short-term behavior.

As we all voraciously take in the news every day, I had a chance to take a step back and

draw from my experience working at Yale for some parallels. Suffice it to say,

David Swenson didn't play the game like SVB did. But I think I know how he would have been spending

his time to prepare for what comes next. Without further ado, here it is. Short-term gain,

long-term pain, part two. David Swenson lived and breathed

long-term investing. From his license plate in Dow, to his aphorism, don't be so short-term,

David walked into the office every day with a mindset that embodied Yale's perpetual time horizon.

The issues I raised in short-term gain, long-term pain three weeks ago, would have resonated with him.

Since then, the collapse of SBB revealed another example of long-term pain inflicted by short-term gains.

The conditions leading to the bank crisis included violations of two of David's beliefs, invest according to first principles,

and take risk only when receiving adequate compensation. In 1994, part of my job at Yale was

managing the bond portfolio. Its purpose was to protect the endowment

against periods of deflation. David built a portfolio true to that objective, comprised almost

entirely of long-duration treasuries and agency mortgage-backed securities backed by the full

faith and credit of the U.S. government. The only deviations from that model were security-specific

opportunities to get paid for illiquidity without taking any interest rate or duration risk.

We owned a strip Brady bond and a closed-end fund trading at a discount as examples.

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