Good morning.

One reason people tend to scoff at innovation is that, when technologies are young, it can be hard to tell the winning ideas apart from the wild ones.

Some of the first airplanes were shaped like bats or kites, powered by steam. (Give me a break!) Another was made of wood and fabric, with modified bicycle chains to power the propellers. (That was the Wright brothers!)

I'm pretty sure, however, that when a guy invents a cryptocurrency as a joke and calls it SCAM, it shouldn't shoot up to a reported market "value" of $70 million. Nor should dogecoin and other so-called alt-coins be worth billions when they have little if any practical use.

My column last weekend pointed out that a good financial adviser can help you stay sane when markets go mad.

I've written before on the right questions to ask an adviser, but this column got the best feedback:

Financial adviser Peter Kranzler commented:

"Ask to see your adviser’s own portfolio": That's good advice. No client has ever asked to see what I owned. If they looked, they would see that I own the same investments they do. A good adviser will eat his own cooking.

...to which reader Andrew Strutynsky replied:

Good admission, Mr. Kranzler. Never eat at a restaurant where the help orders out.

Even if you don't use a financial adviser, I hope you have a trusted friend or family member who can talk you out of reckless risks. Now might be an excellent time to see what the people you admire most think of your latest investing idea—before you pull the trigger.

Last week's question was:

Should Warren Buffett and Charlie Munger step aside? Why or why not?

I wasn't surprised to see that roughly 90% of you think the chairman and vice-chairman of Berkshire Hathaway Inc. should stay right where they are. Here are some of the best thoughts you shared, pro and con:

Is there another CEO in the world that someone would pay $4.6 million to have lunch with? I doubt it. Question answered. —Brandon Bray, Alexandria, Ky.

No, they should not step aside. Buffett and Munger are still putting up numbers.... And I won’t discredit that just because they don’t believe in the same investments that people in my generation do. —Aaron Parks, Commerce Township, Mich.

Human nature might not ever change, but technology does. Where would Berkshire be today if their lieutenants did not make them buy Apple stock (a business Warren said he didn't understand, at the time)? —Frederick Warburg, Boston

They don’t have to step aside. We are not ‘forced’ to invest in their suggestions. If you don’t trust their recommendations, then move on. Let them do what makes them happy👍.
—Joan Glover, Lehigh Valley, Pa.

I would prefer [a transition] to happen while Buffett was around to take heat and use his own halo to give time to the new guy. —Harish Parande, Cumming, Ga.

Sometimes society loses respect based on a person’s age, when perhaps the respect should increase. —Kathy Tyler

Should we be more humble after failing to outperform the market for as long as Buffett and Munger? I certainly think so. —Joshua Mora, Columbus, Ga.

Of the few remaining voices of sanity and reason, they are the only ones with a megaphone. How can we afford to lose them? —Justus Schirmacher, Frankfurt, Germany

Be well and invest well,

Jason

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Here are some of the best things I found over the past week outside The Wall Street Journal:

• Has every form of money become mythical? A question worth pondering, from novelist Lionel Shriver
• Two cryptocurrency funds are earning $1 billion in annual fees for their manager—more than rival Vanguard charges on all its 82 ETFs combined, says ETF.com
• Those online rants about hedge funds short-selling more than 100% of a company's stock are usually wrong, says the Keubiko's Musings blog

Here are some of the best things I found recently in The Wall Street Journal:

• How Warren Buffett's shares went so high that computers could no longer handle trading in Berkshire Hathaway's stock, by Alex Osipovich
• Corn has become the latest commodity to pop in price, report Ryan Dezember and Kirk Maltais
• Burned out by all those Zoom videocalls? Don't feel bad: So is the CEO of Zoom, writes Chip Cutter

During downturns as far back as 1987, Mr. Swensen showed that "the time to put the pedal to the metal is when there’s a dearth of capital and you have distressed sellers," says Ellen Shuman, co-founder of Edgehill Endowment Partners, who worked for him from 1986 to 1998.

Paula Volent, head of the roughly $2 billion Bowdoin College endowment, worked for Mr. Swensen from 1997 to 2000. "He used to say, 'Benjamin Franklin was wrong in saying you can't get away from death and taxes. An endowment can!' "

"David realized that Yale had no need to worry about liquidity, because it isn't going to die," says Charles Ellis, a longtime member of the university's investment committee. "And everybody else does die, so that's a comparative advantage he was determined to exploit."

Mr. Swensen believed that an institution like Yale, with a perpetual investing horizon, should favor "alternative" assets that might offer an extra return because they can't be readily traded like stocks and bonds, such as private-equity and venture-capital funds.

In exchange, Mr. Swensen drove hard bargains: By committing money for years at a time, he got fund managers to cut their fees. His message was: "I’m paying you less, because I'm locking up our capital for longer," recalls investor Ted Seides, who worked for Mr. Swensen from 1992 to 1997.

Twenty years ago, the typical educational endowment had half its assets in stocks and one-quarter in bonds, according to the National Association of College and University Business Officers.

As Yale's strategy crushed the public markets, other institutions shamelessly copied Mr. Swensen. Endowments stampeded out of U.S. stocks and ditched their bonds, replacing them with hedge funds, private-equity and venture funds. Today they have, on average, more than half their assets in these illiquid holdings:

As an old saying goes, "Every bad idea on Wall Street starts out as a good idea." What worked for Yale, because of its ample resources and Mr. Swensen's brilliance, won't work for every pension or endowment. Smaller investors can't get access to the great managers Yale could.

So the types of alternative assets that worked brilliantly for Mr. Swensen underperformed, on average, in nearly every year after they became so popular:

David Swensen thus leaves a mixed legacy.

He inspired imitators who had no realistic hope of equaling his success, leaving many institutions saddled with lagging assets they can't get out of.

But, as my colleagues Juliet Chung and Dawn Lim wrote:

Mr. Swensen notched an average return of 13.1% a year at Yale through June 30, 2020, outpacing the 8.8% average annual return of a traditional portfolio with 60% in stocks and 40% in bonds over the same 35-year period...the endowment’s performance under Mr. Swensen translated to gains of $45.6 billion.

And he should inspire all investors to think about their own comparative advantage. What are you better-positioned to do than most other investors? Don't try to beat them at their game; just play your game the best you can.

It is essential to the well-being of a society that the whole should be less mad than the parts.

— Edgar Wind