Debunking Private Credit Risks

[@samsonsoturian6013]

The sign that a business is a ponzi scheme is they don't like people calling it risky

[@chrisstennett1592]

Did he just spin "Illiquid" into a protection strategy? Because of bank runs.

[@thebarryman]

How exactly does he "mark to market" assets that do not trade on any market?

[@abdeldu133]

That’s the tricky bit. You have to value it either intrasecally either through comparable. There is very little content out there explaining how. Even asset managers themselves got no idea how it is done. In my opinion it should be valued at par unless written down. But the MtM sounds fancy in front investors. Big mistake in my opinion.

[@thebarryman]

@@abdeldu133 seems wild to me that he gives that as an example of why his sector is "less risky."

[@samsonsoturian6013]

Same way your house is appraised. They look at what other similar assets are selling for right now... The perfect opportunity to make shit up

[@xxyyzz8464]

These comments may not age well for Mr. Easterly when all is said and done. Private credit has a pretty small market weighted sample size, and just because you’re “private credit” doesn’t mean you can’t have a business model problem that bankrupts you and your investors.

[@samsonsoturian6013]

Even if it did do well, that's at the expense of borrowers who could get cheaper loans from a bank.

[@clintonlunn4357]

Wait until taxpayers bailout private capital.

[@lambertois11]

Clearly this man is preaching for his parish ! The key difference between private equity and hedge funds, is the valuation of their assets ! Hedge funds assets are evaluated based on their market value ! The evaluation of private equity assets are based on the evaluation of the main partners !

[@samsonsoturian6013]

Technically Hedgies invest in anything they want, even collectibles. The difference is the problems with Hedgies are widely known while most people never heard of private credit

[@I_Love_Figs]

This will age like sushi in a dumpster in summer.