If you go to Harvard, most people think it probably means you're "wicked smart."

It's something I've bought into at times. Heck it's part of why I focused on graduates of Harvard Business School in a book I wrote about entrepreneurship.  

And in fact, most years, Harvard University is one of the hardest colleges in the United States to get into. Last year for example, only 5.2 percent of applicants were admitted--and that's among a group of people who have already self-selected into one of the most competitive admission pools in the country.   

I mention all this because news broke recently that Harvard managed to lose $1.1 billion----while reportedly paying the people it had hired to manage its endowment a total of $242 million.

And the fact that Harvard is so selective, and that so many employers and others view the fact that somebody attended Harvard as a sort of "brilliant person guarantee" filter has made this story resonate with more Americans than if it had happened at a place like, say, the University of Connecticut (one of my alma maters).

As Bloomberg's Michael McDonald and Tatiana Freitas wrote recently when they broke the news:

Harvard made many mistakes over the last decade, according to Thomas Gilbert, a finance professor at the University of Washington, but almost all of them boiled down to a single miscalculation: the belief that its top money managers--who were paid $242 million from 2010 through 2014--were smarter than everyone else and could handle the risks almost all other endowments avoided.

"They became loose cannons," Gilbert says. "When you're managing donor money, it's appalling."

The overall losses can largely be attributed to what Bloomberg called "a foray into natural resources," which included "central California vineyards, Central American teak forests, a cotton farm in Australia, a eucalyptus plantation in Uruguay, and timberland in Romania."

But those investments meant some of Harvard's money was subject to the volatility of these resource markets. And in short, it seems that the so-called "smarter than everyone else" money managers bet wrong.

Bloomberg uses the example of a $150 investment that Harvard made in Brazilian agricultural developments--but that the college is now exiting in the wake of a slowing economy and corruption scandals in that country.

All of this has to be seen in the context of two things:

First, Harvard's $36.4 billion endowment makes it by far the wealthiest school in the United States according to the U.S. Department of Education, and reportedly, the world.

In fact, it's 43 percent bigger than the entire University of Texas system, which is in second place, and Harvard's endowment alone accounts for 6.8 percent of the combined total endowments of the 20 richest U.S. universities.

Second, even with the $1.1 billion loss as a result of some investments, Harvard actually made money in total during the years in question----about a 4.4 percent average annual return over the past decade.

But that puts it below most of its peers. And it means the university would have been considerably better off if it had just invested in a comparatively simple investment vehicle that they wouldn't have had to pay hundreds of millions to managers to create: "a market-tracking index fund holding 60 percent stocks and 40 percent bonds."

That strategy would have yielded about a 6.4 percent return over the same time period. And, it's available even to people whose high school grades and SAT scores weren't high enough for Harvard.