> Non finance people make this mistake all the time, thinking that return is something anyone cares about.

No, return is the whole point of investing. If it wasn’t something anyone cared about, you’d be better off holding a stack of federal reserve notes instead and spending some on your favorite desert because no one cares about the return including the people suing the university endowment. Finance people have such a funny way of using theoretical calculations to confuse themselves out of profits.

The reason for investing is to produce the highest returns within a predefined period of time.

Over 30 years, an endowment that makes 2% higher returns than another endowment will have roughly TWICE as much money as them. That 2% is huge!

You don’t need to be a Katherine Wood to do this. One way to consistently outperform is to pick high performance stocks and avoid (or short/buy puts on) low performance stocks. Try for a moment picking which of these are the better to invest in? Amazon Vs. EBay, SalesForce vs. Oracle, NVidia or AMD vs Intel, Tesla vs Toyota, IBM vs any modern tech company. As a stock picker, you only need to be right 51% of the time to beat the market so if you got 3/5 of the above right, congrats you might be smarter than a university endowment manager. You don’t need to read a 10K or take a finance exam to know that Amazon is going to crush EBay, Salesforce is going to skip along past Oracle, Tesla is going to blow past Toyota, and IBM is going to underperform against any tech index. It’s been that way in the past and barring an act of God or congress, it’s going to continue being that way. Again, you only need to be right 51% of the time to beat an index.

Maybe you don’t have a tech background. Maybe you have a medical background and can pick biotechs. Or maybe you have a grandson or granddaughter. They should be able to pick 2 out of 3 of these out easily:
Snapchat vs Instagram (Facebook), Chipotle vs McDonald’s, Netflix Vs. Redbox. Have I made my point yet that making a high return isn’t as complex as finance people want non-finance people to think it is?

Okay but what if your stock picking stills suck? Or after 5 years of stockpicking, you lose your edge but still want to keep your cozy job. What can you do? If you know how to wield options, you can create a synthetic position on a commonly traded index like SPY(S&P500) or QQQ(NASDAQ 100). Hopefully you picked QQQ instead because it has more tech companies and Tesla while SPY has more COVID-impacted companies and will have to purchase Tesla soon. That would’ve earned you a full 32 basis points (32%) more and will continue in the near term to earn you more —- but maybe you didn’t pick it. You can create a synthetic position on your favorite index benchmark with 2year ITM LEAPs by selling a put and buying a call at the same strike. Doing this only deploys 15% of your capital while having the same effect as deploying 100% of your capital on that index. This means you can use all that extra cash sloshing around in your account to buy something that is highly liquid, is low risk, and appreciates or pays a dividend. Bond ETFs such as the ones by Vanguard fit the bill here nicely. And boom, you’re out performing the benchmark by 1%, 2%, or 3%, depending on the bond duration. Also you can sell your usefulness to the university by letting them know that their portfolio has a lower volatility than the index due to the bonds going up if the stock index options go down which steadies the ship.