Many conservative blogs have been in complete meltdown mode after Globes Online reported that Harvard University had sold off its holdings in Israeli companies. Conservatives, of course, believed that Harvard had caved in to demands of evil Islamic terrorists in its student body (sarcasm).
The most paranoid headline I could find is this deliciously neurotic title from Atlas Shrugs: Harvard Whores for Jihad: Harvard University Fund Sells all Israel holdings. But then again, check out this worried blogger who asks "Et Tu, Harvard?" and blasts the university for preferring "oppressors" (like Saudi Arabia) over Israel.
There is one major problem with the melodramatic conservative meme: it is not true. Harvard has released a statement that responds to the madness. Naturally, Harvard sold its assets for the same reason that most investors do: for financial purposes.
Harvard invested in an emerging market fund that included Israeli assets. Recently, the fund manager categorized Israel as a developed economy, and Harvard rebalanced its holdings by reinvesting those shares in other emerging economies. Harvard, however, still invests in developed economies -- including Israel.