St. John the Divine, NYC
Message from Investment Committee of the Diocesan Trustees
~~~~ “In March 2003, the Investment Committee sent a letter to vestries as the Standard & Poor’s 500 Index was nearing a 50% decline that had started over two years before from record highs.
At that time the Committee’s communication said in part:
We are writing this statement to reassure vestries during this difficult time, one where fear all too easily can overwhelm reason.
We have stressed that a congregation’s portfolio ought to have both bonds and stocks. The portfolio ought to be rebalanced periodically when the percentages go out of line.
The strongest emotion gripping investors is that prices will continue to decline endlessly. Clearly that is not logical.
Once again in 2007-2008 the Standard & Poor’s Index is approaching a drop of 50% from its record high just twelve months ago.
As we stated in 2003, in the depths of a two-year decline,
Equities are volatile. They were when your congregation began to invest in equities, and they will remain so into the future. The reason is clear. Only one-third of stock pricing is determined by economic factors. The remaining two-thirds is set by psychological forces. What has been playing out has little to do with weakness on the economic side. Rather, it has been very powerful emotional reactions that overtake the rational mind. Stay rational. Stay faithful to your agreed-upon asset allocation.”
In 2003 the Committee’s advice proved to be sound. The Committee believes it will prove to be the correct strategy once again.” ~~~~
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After the recent events in the financial markets I’m sure that there are many emails and letters like this one from the Episcopal Diocese of New York are going out…
Unfortunately as the youngest member of the Investment Committee of my church I was never able to persuade the “elders” (late 70’s+) to put part of the endowment into bonds… 100% equities… the report at the next meeting will be brutal… two lessons… I need to make my arguments more forcefully… and small non-profits need better systems and tools to manage endowments… market oppurtunity?
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