Starting in Shanghai, ripping through the United States and then touching down in Europe, Tuesday's stock market plummet made only a ripple in Hanover. The drop impacted the College's investments only mildly and will not adversely affect long-run profits this year, according to Associate Vice President for Fiscal Affairs Julie Dolan, who also sits on the Board of Proprietors of The Dartmouth.
Stocks recovered on Wednesday after investor panic caused the Dow Jones Industrial Average to fall by 3.29 percent on Tuesday, losing a total of 416.02 points. This was the greatest one-day loss since the day the market resumed trading after the Sept. 11 terrorist attacks in 2001.
"First of all, we should not panic," Dolan said. "Fluctuations always do happen in the market."
On Wednesday, the Dow recovered 52.39 points of its loss.
Dolan said she expects the portfolio return for the current fiscal year -- which ends on June 30 -- will top the previous fiscal year's return of 14.9 percent.
Throughout the last year, the College reduced investments in U.S. equity markets from 26 to 20 percent of the total $3.5 billion endowment to focus more investments on international and developing markets.
The College invests a combined 20 percent in international equity and emerging markets, both of which have remained profitable for the 2007 calendar year.
"We have a very diversified portfolio which responds well to these kinds of storms," Dolan said.
Aside from domestic and foreign equity, the portfolio includes venture capital, real estate funds and commodities.
The investment office did not try to quickly sell any of its investments on Tuesday because those investments are long-term, Dolan said.
Though the long-term effects of Tuesday's stock market dive will not be known until the March quarterly report, Dolan said she's not worried.
Tuesday's stock market drop spread from Asia to the United States and Europe, fueled by investors' doubts about the recent market growth. Chinese investors sold stocks on Tuesday to cash in on the Shanghai Composite Index's record-high close, causing it to fall 9 percent. When the U.S. markets opened on Tuesday, traders sold, fretting that the fall in the Asian markets might indicate a global economic slowdown.
Other factors that contributed to the slowdown include former Federal Reserve Chairman Alan Greenspan's warning of a recession one day prior to the plummet. Contributing to the day's uncertainty, the Dow Jones's trading system was unable to display trading figures before 3 p.m. on Tuesday due to the volume of trades.
