Investing is hard work. This is rather depressing. David F. Swensen has written a book called "Unconventional Success: A Fundamental Approach to Personal Investment ". Don't be fooled by the title, his thesis is that ordinary people cannot compete with professionals like him. He runs the endowment fund at Yale University, the most successful fund of its type in America. In an article in the New York Times, Mr Swenson is described as first thinking that his ideas would be useful for the small investor. However he soon realized that what he did as an investor was biased to big institutions only. His biggest advantage is the ability to be diversified beyond the means of the average person.

...the Yale portfolio is extraordinarily diversified, which both lifts returns and protects against disaster. At the end of the 2004 fiscal year, Yale had a mere 15 percent of its assets in domestic equities, and another 15 percent in foreign stocks. It had 15 percent in private equity, and 18 percent in "real assets," which includes investments in timber and energy. But its biggest percentage, 26 percent, was in something called "absolute return." That is a category invented by Mr. Swensen in 1990. It means hedge funds. Before Mr. Swensen arrived on the scene, hedge fund investors were almost exclusively rich people. But he quickly realized that the best hedge fund managers were extremely skilled, and he began putting Yale's money in a variety of hedge funds. Eventually, other institutions realized that Yale was making money in good markets and bad ones, and they raced to copy Mr. Swensen's model. If you want to understand why hedge funds are exploding these days, a big reason is that every big institutional investor in the country is trying to do what Yale does. His new book has given Mr. Swensen a greater appreciation of the enormous advantages he has as an institutional money manager, starting with the obvious fact that he has a staff that spends full-time researching investment possibilities. Thus, he takes it as a given that individuals shouldn't pick stocks themselves. "I see every day how competitive the markets are, and how tough. So the idea that you can do this yourself, that's out the window."

However, readers of Seek Facts should keep the faith. Maybe this guy is one of those Swiss gnomes, and his book is just a way to keep all the loot for him and his buddies. Stay tuned for more investment postings.