The practice at university endowments was to divide investments into silos—stocks, bonds, real estate, commodities, hedge funds, and so forth—and to put a specialist in charge of each category. The way Johnson saw things, this made no sense.[78] The theory behind the silos was that their returns would fluctuate in an uncorrelated way, thus smoothing the performance of the overall portfolio. In reality, Johnson declared firmly, there was scant statistical evidence for this low-correlation claim. Nor was this surprising, because the investments in each silo blurred into one another.
