Monday, January 23, 2006

Blog of the Week: Abnormal Returns

Google is everywhere

Nary a day goes by without Google gracing the headlines in some manner. Now Google (GOOG) is being credited with swelling the endowments of some of the most well-funded universities in the country.

John Hechinger in the Wall Street Journal reports that Stanford University’s endowment leaped to third place on the list of the wealthiest endowments due in part to the performance of Google stock. A number of the top endowments have been investing in venture capital, in its many forms, for quite some time. This is leading to a two-tiered system of higher education with haves and have-nots.

Stanford’s achievement illustrates a great divide in higher education that may only grow wider. Elite schools, already among the nation’s richest charitable institutions, are now increasingly able to pair stellar investment returns and wealthy alumni to build war chests that enable them to hire away top professors and give the most generous financial-aid packages to coveted students. The big risk: The college education available to most in the U.S. could end up weaker, especially in relative terms.

Part of this simply comes down to

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