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Is There a Relationship Between Private Market Valuation and Returns?
The valuation gap between private equities, an the s and p 500 has declined over the period 19 98 through september two thousand 18. Now they also document that there's a significant relationshipn on't know, significance may be not the right word. So when valuations are the same, for example, you might not expect as much, or any, premium, from private equities. And again, we have valuations increasing, which drives down expected returns.
The type of assets which usually come to mind when considering investments are stocks, bonds, or cash, but what are the alternatives? And what kind of returns do alternative asset classes offer? In today’s episode, we delve into the returns which can be expected from alternative asset classes such as private equity, venture capital, angel investing, private credit, hedge funds, direct real estate, and cryptocurrencies. Hear an in-depth analysis based on empirical studies and the expertise of your hosts, Ben and Cameron, to discover whether there is any merit to alternative asset classes as investments. We unpack the extra layer of complexity associated with predicting returns on alternative assets, how to approach calculating returns, and why the associated fees are an essential consideration. We also hear details about an interesting conference Cameron recently attended and briefly recap cryptocurrencies as an investment. You’ll also hear our conversation with our 22 in 22 reading challenge guest David Senra about his reading habits, the books that most inspire him, and his advice for people who want to read more.
Key Points From This Episode:
Links From Today’s Episode:
AQR Capital Management — https://www.aqr.com/
BlackRock Asset Management — https://www.blackrock.com
Bank of America — https://www.bankofamerica.com/
‘The risk and return of venture capital’ — https://www.sciencedirect.com/science/article/pii/S0304405X04001564
‘Performance of Private Credit Funds: A First Look' — https://jai.pm-research.com/content/21/2/31.short
‘Do Hedge Funds Hedge?’ — https://jpm.pm-research.com/content/28/1/6.short
‘The Performance of Hedge Fund Performance Fees’ — https://www.nber.org/papers/w27454
‘Higher risk, lower returns: What hedge fund investors really earn’ — https://www.sciencedirect.com/science/article/abs/pii/S0304405X1100016X
‘Another Look at Private Real Estate Returns by Strategy’ — https://jpm.pm-research.com/content/45/7/95/tab-pdf-trialist
'The Characteristics and Portfolio Behavior of Bitcoin Investors: Evidence from Indirect Cryptocurrency Investments' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3501549
‘Beliefs and the Disposition Effect’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3516567
‘Once Bitten, Twice Shy: The Power of Personal Experiences in Risk Taking’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2506627
S&P Global FinLit Survey — https://gflec.org/initiatives/sp-global-finlit-survey/
Future Proof Conference — https://futureproof.advisorcircle.com/
Invest Like the Best Podcast — https://investlikethebest.libsyn.com/
David Senra on LinkedIn — https://www.linkedin.com/in/david-senra-278843236/
David Senra on Twitter — https://twitter.com/FoundersPodcast?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor
David Senra on Facebook — https://www.facebook.com/david.senra.1
The Founders Podcast — https://founders.simplecast.com/
A Triumph of Genius — https://www.amazon.com/Triumph-Genius-Edwin-Polaroid-Patent/dp/1627227695
Cable Cowboy — https://www.amazon.com/Cable-Cowboy-Malone-Modern-Business/
Titan — https://www.amazon.com/Rare-Chernow-Titan-Life-Rockefeller/
A Man for All Markets — https://www.amazon.com/Man-All-Markets-Street-Dealer/
Against the Odds — https://www.amazon.com/Against-Odds/
Estee: A Success Story — https://www.amazon.com/Estee-Success-Story-Lauder/
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/
Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/?hl=en
Rational Reminder on YouTube — https://www.youtube.com/channel/ Ben Felix — https://www.pwlcapital.com/author/benjamin-felix/
Ben on Twitter — https://twitter.com/benjaminwfelix
Ben on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/
Cameron on Twitter — https://twitter.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
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