Wikipedia talk:Wikipedia Signpost/2023-10-03/News and notes

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• There is also a discussion at User talk:Jimbo Wales#Endowment financial information where I did a comparison to the S&P 500 and median NACUBO endowment returns performance. Sandizer (talk) 20:39, 3 October 2023 (UTC)

If I understand correctly, the claim there is that during the investment time period, the S&P 500 went up 13%, while the Wikimedia Endowment through Tides investment went down by 8%. Is that the claim? If that is the claim, does anyone have enough financial expertise to know what is normal / safe / expected for a nonprofit investment strategy? Bluerasberry (talk) 23:02, 3 October 2023 (UTC)

No, here are the salient parts:

Fiscal year ending June	2017	2018	2019	2020	2021	2022	2023	Mean return
WMF Endowment ESTIMATED* return on investment	7.1%	-8.0%	18.7%	11.6%	14.7%	-17.9%	9.4%	5.1%
Median Nat'l Assoc. of College and University Business Officers endowment returns	12.5%	8.0%	5.1%	1.8%	30.1%	-8.7%	TBD	8.1%
S&P 500 net total return	17.1%	13.7%	9.8%	6.9%	40.1%	-11.0%	19.0%	13.7%

 *assuming half of all contributions were realized on the first day of the fiscal year, and the other half on the last day.

I don't think it's outside typical values, but I'm no institutional investment expert. Sandizer (talk) 00:39, 4 October 2023 (UTC)

• 22 million lost in 2022? Why not just put the endowment in the bank and stop gambling on the markets? As I've said elsewhere, am totally in favor of WMF having as much money on hand and "banked" as possible, and hopefully quite a few billionaires will donate 25 to 100 million each. Hopefully they will also stipulate, as the WMF ought to be doing on its own, that projects put forward by the Wikipedia community, Commons, and the rest of the volunteer core that the public actually believes that they are funding, will be given, and decide among themselves, how to spend 1/3rd of all donations. Randy Kryn (talk) 23:23, 3 October 2023 (UTC)

  They did not actually lose 22 million. Its misleading to think of an unrealized loss in money that is invested in the long term as being the same as actually losing money. Bawolff (talk) 15:40, 4 October 2023 (UTC)

  In the short term, "gambling on the markets" is a bad idea. For long term investments such as this, it's the prudent choice; financial markets have a long history of rising value, even if occasionally impacted by recessions and crises, whereas cash in the bank will lose value over time due to inflation. — The Anome (talk) 08:04, 5 October 2023 (UTC)

  Generally, things like index funds have had a very good and consistent rate of return, because they represent the whole stock market, which in turn represents the whole economy (or at least the whole economy as can be measured and quantified by finance). Of course, there are incidents (1929, 2008, etc) in which every single stock eats it at the same time, but in these cases, the economy as a whole also eats it; in 1929, for example, I don't think there's any place you could have put money where it wouldn't have been substantially affected by the Depression. I believe, although I'm pulling this out of my hat, that the historic rate of return on index fund investment has been somewhere around five to seven percent. Meanwhile, average year-over-year inflation in the US has been somewhere around three to four percent -- if you just put a bunch of cash into a savings account that pays 1% interest you're actually losing money in the long run because the value gets eaten by inflation. The only real way to offset this is by investing it in something with low variange and average RoI, hence throw it in index funds and forget about it. This part, at least, makes sense to me. I don't know why the Endowment didn't do this, but then again, I'm not a finance guy, so I won't presume to know how this works or what a good idea for investing this amount of money looks like. jp×g 18:59, 5 October 2023 (UTC)

  Jimbo has provided some further information on his talk page, based on his conversation with the Endowment President: [1] Andreas JN466 19:25, 5 October 2023 (UTC)