From an investment perspective, "we've started to see the world return to normal again," said James Walsh, Cornell's chief investment officer, in a reunion talk on Cornell's endowment in Statler Hall, June 5.

Walsh reported that, unofficially, at the end of May, the university's endowment performance was down by 26 percent from a year earlier -- just one percentage point off from the 27 percent year-to-year decline reported in December 2008 and comparable to that of many of Cornell's peer universities. Official figures will be available in September for the fiscal year ending June 30.

Cornell's total endowment represents the sum of its permanently invested capital and stands roughly at $4.2 billion, just about what it was in 2006. Nevertheless, Walsh said, the endowment has increased 4.6 percent over the last 10 years, and in recent years it has consistently outperformed the Standard and Poor's 500 Index. Cornell's endowment growth, he said, has also consistently outpaced reliable benchmarks over the past several years.

"Some funds are really bouncing back," said Walsh, a self-admitted optimist. "We are starting to see liquidity return to the market, and the market rallying. In addition, some managers are now outperforming the benchmarks."

Walsh said he anticipated that Cornell would begin investing its cash reserves over the next 18 months to take advantage of undervalued investment opportunities.

"The world will see a huge need for capital as a result of corporate and government debts and as a result of refinancing in the home mortgage industry," he said. "While that is not good news for the economy, I would argue that we have a fantastic opportunity in stepping forward to provide some of that capital."

He warned, however, that "it's not over." The economy still has a tough two to three years ahead, "but the crisis has passed, and we are no longer in danger of a great depression," he said.

Walsh added, "In some ways, Cornell's current investment opportunities are a leading indicator of an improving future."

Leland "Lee" Pillsbury '69 commended Walsh and Cornell's investment leaders for establishing a financial cushion within the university's endowment -- an achievement in contrast with some other university endowments. "This is an extraordinary story for Cornell," Pillsbury said.

In response, Walsh explained that Cornell endowment managers began shifting assets to cash in September 2008, when markets began to weaken substantially. Because of this strategy, Cornell preserved the value of its assets and was able to establish a financial cushion. In general, Walsh said, he always tries to look at the worst-case scenario and plan accordingly.

To learn more about Cornell's endowment, go to http://www.campaign.cornell.edu/endowment.cfm.