The Dividend Cafe Private Markets Trick or Treat?
Oct 31, 2025
Dive into the intriguing world of private markets as risks, rewards, and systemic implications are unveiled. Discover how private credit and equity differ from traditional banking, and the impact of financial shifts post-2008. Hear about the massive growth of private equity and its challenges, such as the exit bottleneck. Unpack what higher returns mean for risk, and the importance of choosing quality managers. Lastly, understand the potential for systemic contagion and how to manage illiquidity effectively.
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Higher Returns Always Mean Higher Risk
- Higher expected returns inherently signal higher risks and trade-offs.
- Treat yield premiums as compensation for illiquidity, default, or leverage risk.
Private Credit Matches Durations Outside Banks
- Private credit are non-bank loans that match asset and investor liability durations better than banks.
- It competes with banks and bond markets while offering less disclosure and more illiquidity.
Private Equity's Massive Growth And Public Shrinkage
- Private equity has grown massively from about $100B in the 1990s to $7.6T today.
- Many companies stay private longer, reducing public-market access to early growth.