Cotton Mather, champion of the Salem witch trials and Harvard man (class of 1678), often sermonized on the evils of education. Too much learning without humility made smart people do foolish things. Not to be forgotten, he said, was the fact that brash New World Puritans built schools and churches on what had been "the Devil’s territories" and the previous owner was "exceedingly disturbed."

To judge from the ungodly endowment losses suffered by virtually all U.S. colleges and universities, Mather may have been on to something. Harvard, the world’s richest university, lost $10 billion in the 12 months ended June 30. Yale, whose seductive endowment model was widely emulated, lost $5.6 billion. Hundreds of schools have been forced to fire faculty, shutter programs and boost tuition. Princeton and Stanford floated billion-dollar bonds to cover portfolio losses and meet day-to-day expenses.

Institutional Investor Writers Julie Segal, old-school chronicler of dumb money decisions, and Fran Denmark, ever-curious docent of endowments, spent months interviewing elusive endowment managers and advisers, visiting campuses and sifting through stacks of jargon-filled reports. The resulting tale, edited with eloquence and erudition by Michael Peltz, provides no shortage of lux and veritas.

Don’t miss this read ("Lessons Learned"). The Devil’s in the details.