Crimson-Colored Glasses

Harvard professor Greg Mankiw was delighted when he spotted portfolio-theory trash-talking at the Harvard-Yale football game. Sadly, the good professor is guilty of looking through crimson-colored glasses. WSJ:

In the fiscal year that ended June 30, Yale University earned a return of 20.2% on its endowment, easily topping the 15.4% gain reported by Harvard University. Yale’s performance was the best among the eight Ivy League schools, while Harvard’s was the worst.

The rout was the fourth victory in a row over Harvard for David Swensen, who manages Yale’s $23.9 billion endowment, and his eighth in the past decade.

Ultimately, however, size matters: Harvard's endowment ($36.4 billion) is still much bigger than Yale's ($23.9 billion), and the absolute rankings are unlikely to change for the foreseeable future. [Note: if both Yale and Harvard were to duplicate their respective performances in the current year--and without considering contributions, withdrawals, and expenses--Yale and Harvard's portfolio would increase by $4.8 billion and $5.6 billion, respectively. The much larger base that Harvard starts from ensures that the richest stays that way.]