Cloud 9fin What could go wrong in the 'golden age' of private credit?
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Nov 20, 2024 Dan Zwirn, Co-founding CEO and CIO of Arena Investors, delves into the complexities of the private credit market. He challenges the notion that we are in a 'golden age,' addressing the oversaturation and risks tied to direct lending. Zwirn discusses how monetary policies may impact investments and the rising bankruptcies in the space. He highlights the challenges faced by both General Partners and Limited Partners, along with strategies to navigate this evolving landscape, emphasizing a cautious yet opportunistic approach.
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Product Focus Over Investment Quality
- The rise of private credit is driven by the selling of product, not necessarily by sound investments.
- This focus on product sales, rather than investment quality, is a systemic issue.
The Everything Bubble
- Irresponsible monetary and fiscal policies have created an everything bubble.
- This bubble has inflated asset values beyond their true worth, leading to a looming correction.
VC's Shifting Focus
- The venture capital industry quickly moved from crypto/blockchain to AI.
- This illustrates the industry's tendency to chase the newest trend to attract funding.