CHAPTER   20

Investment Myths

The science of investing is infested with so many myths and old wives’ tales that even well-respected academics fail to question some of them. One well-publicized economics professor has even pushed in his blog the index myth when some simple arithmetic would show it to be false. Here are some of the more egregious myths that have a serious impact on board members and investment officers and their ability to manage the investment portfolio.

Asset Allocation

One of the biggest myths in the industry, and the one that seems to be known by every foundation board member, is the one about asset allocation. In 1986, Brinson, Hood and Bebower, and then again in 1991 Brinson, Singer and Bebower, wrote papers that were picked ...

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