Warren Buffett: Private Equity Firms Are Typically Very Dishonest

Warren Buffett is well-known for promoting the clear success of value investing, but one lesser known attitude he holds is his disdain for private equity firms. In this video, Warren and Charlie explain why they dislike private equity and so-called "alternative investments".

[@persimmontea6383]

Had a great dentist with wonderful clinic. He retired and sold it to his partners who flipped it to P.E. ... They got rid of the great staff, jacked up prices and started pressuring you to get unnecessary treatments. They wrecked it. Great dentists .... lousy staff and now empty waiting rooms .... and after 40 years I am leaving. It was so much better run by someone who cared about the patients.

[@FortuneCookieLies]

They are absolutely right on private equity. They don't really add value to the companies they buy but instead use it to add fees to max out their pay and give a smaller than average return than if you owned the company outright.

[@stevejackson7594]

Read the book that just came out "Plunder : private equity's plan to pillage America"

[@mlh5434]

If PE doesn't serve any real function then why does it...continue to exist? In my experience, if something doesn't add value, it eventually goes out of business. The only exception to this is if its existence is due to government monopoly/regulation/franchise, which isn't the case here. So if PE firms truly don't add any value, why do small companies keep....using them for going on 4 plus decades now? Are they just all collectively stupid?

[@denizpamir]

@@mlh5434 Small companies need PE because otherwise they don't have access to capital and they can't use debt. PE firms add value. Investors are happy, businesses are happy, that's why PEs are still out there.

[@opreadumitru1]

Buffett is the epytome of cronyism and why most american jobs fled and were traitorously exported offshore while this old crook uses charities as a facade to avoid legally paying taxes PE is the fair chance the small and mid business have to compete with big crooks like Berkshire and other oligarchs that are politically sponsored and well connected to Obama and washington I would remind you he sponsored obongo's presidential campaign

[@ep4169]

@@stevejackson7594 And if you're looking for a rebuttal to that dishonest book, listen to David Bahsen's review on the Capital Record podcast, 8/17/2023.

[@ronaldcole7415]

Anyone who claims they invest better than Warren Buffet is the exact person you want to avoid.

[@user-zf8yh2cu5f]

Seriously? Hero worship is for children.

[@MountainViews90]

The bitcoin bros

[@adamjackson6002]

So Tony Robbins 🤣

[@stuartcarter4139]

@@user-zf8yh2cu5f yeah, and the people who claim to be better than buffet tend to be respected on the basis of hero worship rather than the basis of accumulating billions and billions of dollars for themselves and even more for their shareholders ​​⁠

[@bl9531]

Having worked in a public sector pension in Canada, I can confirm Munger’s observation (4:02). One of the principal attractions of private equity, infrastructure and the like for a pension fund is nobody really knows what they are actually worth so values are smoothed out over time. This gives the illusion of stability vs public stocks whose liquidation value is observable in real time.

[@W.C.]

interesting. even though it's far less liquid, they'd rather just get an abstract valuation to look at

[@ShaggyRogers1]

@@W.C. That's the biggest reason to use a private investment firm. You have them watch the short term numbers, and trust that they give you a good long term number. The issue is that no one actually checks to see what the investment firms are doing, so they are left free to control vast parts of society using other people's money to do it.

[@glendavis1266]

When using other peoples money will you be really careful?

[@dave9351]

@@glendavis1266 Ask Congress

[@alexeivoloshin5984]

It's not that difficult to compute the worth of things that you mentioned. Problem is that Canada is a communist country, so the market is heavily manipulated by the government.

[@inertiaforce7846]

When it comes to investing I don't listen to Dave Ramsey. I listen to Warren Buffett.

[@whatever9506]

How many millions do you have?

[@TravisMcGee151]

Dave Ramsey is out to lunch. He gives a lot of misinformation. Stay away from Dave.

[@caveson7316]

@@whatever9506 if thats your measure for who to trust that's hilarious, what a moron

[@dougherbert7899]

@@TravisMcGee151 Warren Buffet gives good advice for people with money, Ramsey gives good advice for the bottom 90%. Different people need different advice. I listen to both, I listen to their arguments, and I make my own decisions.

[@inertiaforce7846]

@@TravisMcGee151 He gives good advice on paying off debt. I don't follow his investment advice though.

[@joshuaturnage5243]

What I understand about private equity is that it's sole purpose is to take the money and run. They are not actually interested in growing the company long term. Private Equity just destroys companies in the long term. Basically they run up debt to improve cash flow. Eventually the company gets so much debt they have to file for bankruptcy.

[@ep4169]

Private equity investment has the same goal as any other investment: to get the best possible return. The cliche of buying asset and then running it into the ground is not rational behavior, so why would they do it? Often PE will invest in distressed assets that have no other access to capital. The alternative is for the enterprise to fold. Also, no one forced the owners to sell. Most of the time the enterprise is able to be turned around and built into a successful company. Sometimes it's not, in which case the assets are liquidated. Yes, salesmen will always try to put lipstick on a pig and exaggerate their return. But that is not unique to private equity. Perhaps this video should have been titled, "Salesmen are typically dishonest".

[@aformist]

@@ep4169 But how come we collectively accept "get the best possible return" without demanding "tempered by ethical standards that uphold the basic humanity of affected stakeholders?" We all just accept the premise when the premise has no bounds, that gives any bad actor the excuse that they're only "doing what's best for the investors".

[@ep4169]

@aformist Good question. Of course we would want all actors in an economy to act ethically and humanely, whether they are entrepreneurs, investors, unions, or employees. But no system can guarantee that kind of behavior without resorting to coercion, which both takes away private property rights and imposes external values on those who have risked their own money. A better way to ensure good behavior is to make it in the best interest of the parties involved to do so. But this is where the argument of the critics of PE falls down. When they accuse investors of driving their assets into the ground, they are accusing them of basically irrational behavior. Why would someone buy an asset simply to destroy it? If the asset is beyond repair, then of course the only alternative is to liquidate it, just like taking your old car to the junkyard. But if it can be saved, then a rational actor would work to rehab the asset to maximize its value. Sure there may be some outlying bad actors but if the correct incentives are in place then by and large the system works. The failure mode is actually where the market system demonstrates its superiority. Enterprises that do not provide value should be ended and the capital put to better use. Contrast that with worthless government or university bureaucracies that have long outlived their usefulness but continue to draw money for decades because there is no impetus to kill them off.

[@aformist]

@ep4169 I can appreciate the sentiment, but there absolutely are incentives to dismantling an "asset" you invested in. It also seems disingenuous to reduce PE investment as simple assets providing value when there is historical evidence they view their acquisitions as "Storage Wars"-esque collections of more-discrete valuable assets for appropriation or sale, while leveraging said acquisitions for more credit to feed the beast.

[@joshuaturnage5243]

@@ep4169 I believe the American Corporations need to kill off the wasteful companies & let the strong survive. There's just too much corruption in American companies today as well as the government supporting companies by giving them free money. Remember when Chrysler was bailed out by the u.s. government. We the taxes payers paid for Chryslers mistakes. Bad money always pushes out good money if given the opportunity. PE acts like the Mafia or crime inc.

[@elvismark5172]

Warren Buffett was right!!!! At the beginning of the year, I have continued to purchase a few equities, but nothing significant. Why am I being so unkind to this? The fact that others in my field make six figures each piece, nevertheless, motivates me to want to be the first member of my polygamous family to earn a million dollars. I am fully aware of the expense of working more to get more money.

[@waynestones]

The top experts, however, have access to confidential information and data that is not made available to the broader public. Being knowledgeable enough to use them successfully is quite another. Big returns, not changing stochastics, are the key. Rewards and risks must be balanced. To reach your aim, pick the right size and turn your edge as often as necessary.

[@oscarjiron6974]

You're not doing anything incorrectly; you simply lack the expertise to capitalize in a down market. Professionals with extensive expertise who must have witnessed the 2008 crisis are the only ones who may profit significantly during turbulent times like this.

[@AnthonyHart34]

@@oscarjiron6974 I require suggestions on how to restore my portfolio and create more effective strategies in light of the huge declines. Where can I locate this instructor?

[@oscarjiron6974]

@@AnthonyHart34 You may locate "Ruth Loralann Brennan" using a search engine, of course. But I'm not sure if I have authorization to talk about this. She received a lot of media attention in 2020. She manages my portfolio and serves as my mentor.

[@snorttroll4379]

tips on living a life with several wives?

[@timothywatson7007]

This is the generation to listen to, no beat around the bush BS nonsense, just straight up education on what is financially feasible.

[@GlennC789]

Truly the greatest generation. Few of them left. I worry about what'll happen to Costco when its founders die.

[@worldmikel]

@@GlennC789 Yeah. Anybody see the OXFAM "Survival of the Richest"? Poor 1% only pulling down a couple billion dollars each day. Even if they started paying taxes now, it would be decades before the disparity gap got to be reasonable.

[@GlennC789]

@@worldmikel Oh I'm 100% with you. But It does seem the "greatest generation" folks at least had some sense of civic responsibility, like Buffett and the Costco founders I mention. Whereas now it's just 100% screw everybody any way you can, no apologies no excuses.

[@worldmikel]

@@GlennC789 Not so sure about that. He's part of that billionaire "pledge" to Bill & Melinda narcissistic philanthropy group. They haven't signed over their wealth, just pledged it. Like PBS fundraising drive. Empty promise until the funds are transferred. And these "philanthropic" groups? Whew! What a crock. Veiled self-service.

[@benz500r]

My words don’t count, but I agree with them. I’ve been observing the entire environment and there is difficult to find anyone honest nowadays.

[@Trezker]

If you have money to manage, don't let other people manage it for you. Do your own investing.

[@Maliceless100]

Private equity firms *reduce quality* (of goods and services) *while raising prices* (for those goods and services).

[@pranavmanie1479]

private equity is a classic "skin in the game" problem. their money comes from fees, but they are not hurt by how they manage or mismanage the firms they buy out. that is a massive incentive problem, because they take little risk for what seem to be ridiculous rewards.

[@justinmiller7083]

Fees are based on the size of the asset. Asset goes down - fees go down. Returns are lower, they don't hit the watermark to earn more.

[@kannermw]

​@@justinmiller7083Nonsense BS. PEs create massive debt obligation for acquired companies and then liquidate assets like buildings and property to generate additional cash for the ongoing PE shell game of paying the debt they imposed on the business. Essentially making the business pay for PEs debt for free while they collect management fees. Then on top of debt the acquired company now has to pay rent for original buildings they owned creating additional cash flow disaster. Then PE files bankruptcy on acquired company screwing over crefitors and employees. Meanwhile PE has made away with the proceeds in cash from asset liquidation before bankruptcy filing.

[@niklastjitra1323]

It's not that simple, you should look up how the fees are calculated. They lessen the risk for the partners drastically.​@@justinmiller7083

[@skipkapur1]

Buffett is as good as one can get in investing. Also good character. And a great teacher.

[@damham5689]

Just wait until Warren and Charlie pass away. BRK will likely do a 180 to the dark side like Vanguard did after Jack left.

[@kennyg63]

@@damham5689 Vanguard is not a publicly traded company.

[@scottyschade]

Look up Dow chemical with Berkshire , you’re totally brainwashed on him

[@lostagain7292]

Are you serious? He’s an ACTUAL scumbag! Have you not been following the railroad strike situation and his roll in denying safety regulations, union busting, and lobbying the government to deny basic humanity to people across multiple sectors?! F that guy billionaires are scumbags.

[@johnisaacfelipe6357]

The actual good people are dying, being replaced by utter snakes and cynics. The world is going to get worse in the next few decades, I assure you.

[@BradColemanisHere]

It's a good point. He's too nice to come out and say it but yeah, private equity is about being a good salesman and playing with other people's money with no weight or collateral to that investment. I spent 7 years working for a company who built their culture as a private company, then while I was there they went public, went private again, and went public again! As an inside guy I can tell you it was all smoke and mirrors. They're still struggling to figure out who they are. I got bonuses in a LOT of options that were of negative value when it came time to exercise them.

[@champhallier8468]

Investors have a lot to think about and losses to make up after a dreadful year in 2022. The Federal Reserve is expected to continue raising interest rates even if the economy slows down, which implies that portfolio returns will be negative in the first quarter of 2023 despite an inflation report and a wealth of other data. In this shaky economy, how can I generate money? Yet debatable is my $450k bond and equity portfolio.

[@trazzpalmer3199]

You’re right! The current market might give opportunities to maximize profit, but in order to execute such effective transactions, you must be a skilled practitioner.

[@hannahdonald9071]

I concur, which is why I like giving an investing coach responsibility for making everyday decisions. Given their specialized knowledge and study, as well as the fact that every one of their skills is aimed on leveraging risk for its asymmetrical potential and limiting it as a buffer against certain unfavorable turns, it is practically impossible for them to underperform. Over the course of more than two years, I've worked with an investment coach ^^Maria Juliana Ramirez^^ and earned massively.

[@tampabayrodeo2474]

@@hannahdonald9071 Who is this person? Is she worth recommending?

[@champhallier8468]

@@hannahdonald9071 thank you. just wrote her on her webpage.

[@mcginnnavraj4201]

@@hannahdonald9071 very nice

[@PamelaFrost]

Here in oz, the bigs Union run funds have large amounts tied up in private equity. It is seldom written down as there is no requirement to disclose these investments. There is plenty of talk about the situation, but there is no action as yet from our regulator!

[@ideabank.]

wow so informative! Thank you for this video! Please keep uploading.

[@TH-dg2mm]

It's crazy that Warren Buffet is 92.

[@Zb_Calisthenic]

McDonald's did him well

[@A-X-25]

I mean, his body. The rest of it is another story.

[@tomwalker389]

His time is coming soon.

[@robertewalt7789]

And partner Munger is even older.

[@TheBooban]

@@A-X-25 he should have retired half a century ago. He can’t go have fun now. He wouldn’t know what to do now.

[@marcrankin1707]

PE is a double dipping phenomenon. The investors put up 30% of their liquidity ( and in the case of purchasing a medical practice, is paid back by the doctors) the other 70% is debt they take on, often by tapping into public retirement funds. The investors not only make a profit from the business generated, but are given a paid position in the business they bought even though they don’t necessarily have expertise in that field.

[@elo5193]

What paid position do investors get? I don't know, so I ask.

[@marcrankin1707]

@@elo5193 if you are part of a PE group and you put up 30% liquidity, ostensibly you have shares and get your return on investment. Since you are an owner you can then get a paid position in the company (like an office manager) and get paid through that avenue as well. Basically a “no show” job.

[@elo5193]

@@marcrankin1707 That's regular practice? PE firms get returns on their investments in a business but also give themselves bogus "management" roles where they don't do anything but get paid?

[@marcrankin1707]

@@elo5193 it’s not that they don’t do anything, but they make take a position in a business where they have no expertise. For example, a business can acquire a medical practice and one of the investors can be the office manager. He/she may have experience running a company, but not in a healthcare setting. The grassroots healthcare delivery is patient care driven and approaching with a strictly business minded models is inherent with divergent interests and a prelude to conflicts. One is focused on revenue generating, the other with quality delivery.

[@elo5193]

@@marcrankin1707 Do you mean a managing director or VP get put on the project and get a project management roles? So they get paid by their firm and then through their firm again but for the management role of the project? How significant are these roles compensated?

[@petermcmahan4975]

PE is buying huge swaths of the medical services sector and the inland maritime sector. They own most of the inland barge lines in the US. It’s really tragic as they cut pay and benefits and saddle the companies with debts designed to never pay off making the companies employees wage slaves. The investors offer no added value but when they get lucky and the company they bought does really well for business cycle reasons they take it public running up the value and unloading it on index investors.

[@kxkxkxkx]

The employees can quit at any time 😂 fool

[@Davek111]

@@kxkxkxkx Unfortunately that's not a valid option for most people.

[@rakshay-jain]

At what company are average employees not wage slaves?

[@casparcoaster1936]

mind blowing believeable.... good God...

[@TheBeeFactory]

@@kxkxkxkx No they can't, you sick f**king ghoul. Disgusting, bootlicking, scumbag, class traitor. Enjoy your chains, slave.

[@Ben-dc1sx]

I wish him well

[@ayushzaveri8193]

I learnt more about investing by reading Graham and listening to Buffett than I learnt in 3 years of college

[@Youtuube304s]

Of course you did. These guys are worth billions from investing. Why would you expect people making 100k to 200k a year to be as insightful?

[@boggy7665]

@@Youtuube304s The worth of a man's labor is not necessarily related to the salary he receives for it.

[@salexander3801]

@@boggy7665🔥

[@susankariuki8509]

I am information gathering out on PE Fund....this is my 2nd video ....who is Graham? Book Title???

[@opreadumitru1]

Buffett and Graham are obsolete today and of course no rich man will ever tell you 100% how or from whom or in what terms honestly got that initial seed money for his so much trumpeted value investing as if he invented hot water again or the wheel The period between 1950 to 2000 was probably the best time in history (Bull market with few exceptions) for all not only for Buffett the ocean that rises lifts all boats regardless if they are yachts or wooden Today is completely unpredictable if you will hold shares or mutual funds for the next 10-30 years you will be very very sorry unless you keep a very close eye and take active participation because many big business will no longer exist in 10-30 years from now due to AI and other disruptive tech and events in todays market you can only plan for one to three years and then either sell or hold depending on context and situation long gone are the old days where you slept at night not knowing for decades what your money is doing in a forgotten mutual fund

[@yung1448]

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[@yung1448]

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[@yung1448]

I am fortunate I made productive decisions that changed my finances (gathered over 1M in 2years) through my financiaI planner. Got my 2nd house in Feb, and hoping to retire soon. Give this a try and attain good-returns.

[@yung1448]

get her

[@yung1448]

REBECCA MARTIN WATSON

[@pm71241]

As someone having worked in a company transitioning from being privately owned to being owned by a private equity fond ... They are not healthy ...

[@ppumpkin3282]

If they don't file SEC forms showing their real return history, have readily available market values, I don't want to invest.

[@cavaleermountaineer3839]

The Midwest Sages....shootin down the city slickers. Gotta love it.

[@moncorp1]

Its going to be a worse place when these two geniuses are gone.

[@chiquita683]

Why? What life saving technologies have they invented?

[@garyspence2128]

I think the statement is a reference to their basic honesty and trustworthiness, as opposed to the inherent self-dealing and potential for fraud among the private equity crowd.

[@TheLuminousOne]

sure 😂

[@theocroker-sd6zk]

Hit 200k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started with 17k in last month 2024 Investing with Juliana Heidi

[@darrenmoore-xx5rc]

Wow that's huge, how do you make that much monthly?

[@kevingutierrez-nc8gw]

The first time we had tried, we invested $5,000 and after a week we received $23,400. That really helped us a lot to pay our bills.

[@nimosteve882]

Juliana is doing great things for this world and I'm on board with that! Slowly increasing and staking my investment while the ecosystem is developing.❤

[@maulrus-6tr]

Wow wow please is there any way to reach her services, I work 3 jobs and trying to pay off my loan for a while now, please help me..

[@theocroker-sd6zk]

@HEIDI39...THAT'S IT

[@nvda2damoon]

Warren is spot on. after the rediculous fees PE performance is very poor compared to SPX... the only people getting rich are the operators.

[@MadLadsAnonymous]

Sorry, what is SPX?

[@mapryan]

@@MadLadsAnonymous SPX = S&P500

[@kurtfrancis4621]

Ridiculous. I agree.

[@arcticwolf9332]

That is the reality, my friend. Unfortunately.

[@Buddyrtc]

Top quartile PE performance absolutely annihilates the SP500 and it’s not even close. Invest in shitty managers and you will have shitty performance, but if you can find any Cambridge Associates benchmarking data you’ll see top quartile performers in PE regularly outperform the market by a wide margin.

[@bodenao]

Private valuations that are not publicly released and there can be a significant dislocation to stock market valuations. The plummeting S&P and NASDAQ in 2022 has not yet been reflected in PE valuations and if it has, it may not be accurate. It wouldn't be a big deal if the PE world was limited to wealthy individuals and enterprises but pension funds get in on the PE action so John and Jane Doe are exposed unwittingly.

[@kenarthur6253]

I've worked for a company that was bought by a Private Equity company. All about the bottom line. Not fun working under these conditions, for sure. 🤦

[@exoxy]

Here in Australia our finance industry is totally in thrall to the supposed magic of "alternative" investments. We are supposed to believe that because their holdings aren't subject to the day to day pricing of stock markets, they are somehow safer. And nobody sees any problem with the fact that its the private equity managers themselves that get to decide how to value their assets! And their fees are calculated from these assessments! And we are forced to give 10% of our paychecks to the simpletons in the pension funds who are hypnotized by these characters. Its like I'm living some twilight zone of stupidity.

[@stevenglowacki8576]

I understand the requirement in Australia to automatically be forced to put a decent chunk of your paycheck into the retirement system, but do you get no say at all in what it invests in? Most employer plans in the US offer a decent range of investment options from which the employee can choose; they might not have every option, but they're given at least some broad-based option.

[@exoxy]

@@stevenglowacki8576 Workers may choose their pension fund (we call them superannuation funds) but the industry is dominated by a few funds which we call industry funds and are the equivalent of US based public pension funds. These account for about 80% of the industry AUM and are populated by clueless academics, public servants and ex Labor party hacks; it is these funds which are putting more and more of workers seized money into illiquid "alternatives". The other fund options are expensive for-profit funds run by fund managers who consistently underperform the market. That is to say, we have the choice between a horse's anus and a donkey's anus. Only very recently has Vanguard introduced a low cost index fund based Superannuation product (much to the chagrin of the incumbents) and I transferred to them as soon as I could.

[@stevenglowacki8576]

I guess I didn't realize the lack of good investment options in general outside of the US. I suppose the superannuation funds have specific legal requirements that need to be followed so it's not like every fund company in the US can just open up one in Australia easily, and they probably don't see the market as large enough to bother.

[@exoxy]

@@stevenglowacki8576 its a 3 trillion dollar market and counting.

[@chrisbuesnell3428]

@@stevenglowacki8576 Biased nonsense.

[@AwesomeCrackDealer]

Yeah, PE might not be so hot in a competitive market such as the US, but returns are great in more assymetric markets such as Brazil

[@BabaDka]

Follow the money. Amends §177 of the RSSL to increase NYCERS’ allowable investments in “Basket Clause” investments from 25% to 35% of fund assets. The Basket Clause provides a limit on the amount of NYCERS assets that can be invested in products not expressly authorized in Section 177.

[@gastromacho2]

Thank you for this perspective. Has to be careful with the Private Equities..

[@andrewmaina8422]

They are not that bad. It is only that nobody ever knows what they are doing.

[@funnzypink]

@@andrewmaina8422 huh? then that’s bad 😅

[@michaelwithers280]

This is an argument that Clifford Asness makes as well. He calls it volatility laundering

[@cloudyblaze7916]

I agree. I remember one I was invested with and I lost almost all of my money, while they were charging hefty commission. Not doing that anymore, but I'm not so versed with the market myself. I know I can profit though-- can't believe the S&P 500 is up 25% this year! I wonder what next year holds.

[@peterbland7227]

I would be wary of an investment that does not have any oversight or governance. I prefer “boring” investments. Very happy with 6 or 7 % returns. In addition, I strive for as little unsecured debt as possible.

[@nickb-]

Private equity is Berkshire's main competitor these days, so Warren never misses a chance to attack them. But PE is not some new crazy fad, it was established in its current form in the mid-1940s. Pension funds, sovereign wealth funds, etc, around the world have spent 70+ years studying PE's performance in every possible way and they just keep increasing their exposure to the asset class.

[@bobfg3130]

Nice try. Private Equity is an issue.

[@Amnesiaasdf1239]

@@bobfg3130how exactly is private equity in issue? I work in the sector myself and what he says about funds is definitely not true.

[@Mtheory989]

PE firms can “mark-to-make-believe”. And because they don’t mark to market returns (so called IRRs) look smooth and stable which gives a highly inflated Sharpe ratio. Rarely do PE firms take impairment charges (ie mark down their investments) during the tenor of a particular vintage. Only when they need to exit after 5 or 10 years will they realise losses. This keeps values inflated which allows PE firms to keep charging a higher cost of carry. Even independent fund administrators are perversely incentivised to keep values inflated because they charge on a basis point model. Also, PE firms essentially leverage (ie LBOs) the hell out of investments using the free cash flow of the underlying company to pay off interest expenses, which usually leads to cost cutting at the company instead of investing for long-term growth. The return profile between the investor and PE firm is asymmetrical. Essentially investors absorb almost all of the losses because PE firms only put up a small portion of their own capital, while investors put up most of the capital whilst the PE firm charges large management fees on committed, called and uncalled capital during the tenor of a vintage. Leverage juices the returns for both the investor and PE firm when things go right, but disproportionately negatively impacts the investor when an investment sours.

[@Mtheory989]

@Amnesiaasdf - just wondering if you feel any of my points are worth contending.

[@bobfg3130]

@@Amnesiaasdf1239 Private equity is an issue. If you haven't figured that out, that's your problem. You work in the business? You either don't understand it properly so you working in the business means 0 or are lying. Which one iS it?

[@jerryware1970]

Studies show the Russell 2000 ETF correlates private equity with dramatically lower costs and more liquid.

[@daltonkamau204]

What about the security funds that out perform the S&P 500?

[@charlespoirier541]

These 2 guys know stuff.

[@frank9253]

He’s talking about Larry Fink and Blackrock.

[@olusegunakintunde6297]

My only question: is Berkshire any different from Black Rock? One is publicly traded and is bound by SEC bylaws. However, they have the EXACT same mission: MAXIMIZE shareholder value. Neither entity has cornered the integrity market. History bears that out.

[@skzion2]

Every corporation is supposed to be maximizing shareholder return.

[@damham5689]

Pretty obvious. But truthfully I doubt anyone can truthfully point to a single business that hasn't and doesn't break laws and lie at some time. Im not saying they should, Im saying they do and they get away with it because out justice system often settles with no admission of guilt. And the fines are less than the reward of crime.

[@matthewbridges3147]

I can't believe Charlie's 99

[@SolracCAP]

And sharp! Amazing!

[@_Huperniketes_]

He’s dead, Jim.

[@jtaco4101]

Charlie munger is freaking hilarious

[@pan_bev_nice5960]

So lovely to see Charlie.

[@rrjr4577]

When is this video from? I trying to find the event/date where WB made these comments. Any help appreciated.

[@cnwil4594]

I have always thought this.

[@Joseph-zw3sb]

Private equity sounds like a mechanism that extracts the most amount of value from a business, and transfers that wealth to the few general partners. Everyone loses - the business, the employees, the local consumers, the tax payers.... except for the general partners!

[@Sarah-ui3vd]

Just buy Gold, the government has failed us or try to diversify your portfolio to other market sectors, that way your investment is balanced and you don’t get to make so much losses.

[@MileyHumphrey-ql4jp]

Indeed, gold proves to be a strong investment and a reliable hedge against the declining value of the dollar. I've held onto some gold for quite some time, and I'm thankful that my advisor's rapid adjustments to market fluctuations have likely prevented significant losses.

[@mtwain1674]

Yep, you have the gist of it, though I would add the investors in the private equity fund to the list of losers you describe. The people that do the best at private equity, and do so with the least amount of risk, are the general partners of the fund.

[@TT3TT3]

Thieves

[@peterh5165]

PE executive compensation is obscene!

[@wallacesims9294]

What happened with Buffett and Becky Quick on his NetJet?

[@alexeivoloshin5984]

Problem is not private equity. Rather, you it's forced contribution to private equity. That creates moral hazard.

[@AlienEntity1]

Good god it's like watching Statler and Waldorf....

[@savagereason9153]

They’re also typically very hard to control

[@joeymanny]

old school investing still the best way, watching supply and demand, and the feasibility, Now all are speculation and gamble

[@overcastfriday81]

That's interesting because Berkshire Hathaway owns several companies like Wyman Gordon, who go around gobbling up private equity firms. That's why they have something like 10 separate accounting systems in the various business units. If I go to the classified for small businesses up for sale, the asking price will be about 4x annual cash flow. If someone was a runner up bidder offering to always take that business off my hands, (giving me stock market-like liquidity), perhaps I'd pay as much as 6x cash flow. Still, that's a heck of a lot better than buying coca cola which costs about 22x cash flow.

[@mikedindy574]

This hits so hard with everything happening with Steward healthcare.

[@jz5005]

I was born in Wpg. I wish I heard the question.

[@phillp7777]

what happened in Winnipeg? sounds like they had disaster PE thing take over?

[@daryl9799]

I'll tell you what's happening in Winnipeg its a shit hole lol lived there for 2 years wouldn't go back if you paid me. Manitoba is the worst province I've ever lived!

[@sfperalta]

One hundred ninety one years of experience between those two men. Amazing!

[@interests1094]

Yes the Warren buffet Charlie Munger school of investing

[@alterego157]

Easily defeated by ten 20yo kids

[@sirblackstone]

This is an interesting perspective. I started an internship in the alternative investment industry. Buffett is right that the money in private equity has skyrocketed. On the other hand, alternatives are so much more than private equity. Alternatives are all unconventional investments (not stocks, bonds, real estate), plus all conventional investments which are invested in by partnerships. Some alternatives will beat the market soundly over the next several years while others will falter, however the industry will continue to stand the test of time because people will always find the next new thing.

[@YEC999]

"The next big thing" is the opposite of Buffets investment style.

[@sirblackstone]

@@YEC999 for Buffett's investment style, the next big things would generally be investments with excellent value. Those kinds of value equities vary according to market conditions, thus becoming "new" investment opportunities, even if the asset has been around for a very long time.

[@markio2010]

Alts would be more atractive if they would offer trouble free liquidity and companies would keep their promise.

[@sirblackstone]

@@markio2010 That is a huge problem with PE, venture capital, and to a lessor extent, hedge funds. For trouble free liquidity, there is a small amount of publicly traded stuff like RIETs and credit funds. Those are higher risk than bonds, but easy to trade and offer higher rates.

[@ggttuuxx]

In theory it sounds pretty good for the intern. In reality, the "Alternatives" are mostly populated with people doing nothing very spectacular, yet charging spectacularly for them. In that they are a sort of scams.

[@TeresaCook-de6jo]

I agree! These two are my gurus and will be long after they are both gone:) I would love to see warren buffet speak in person. I love that they constantly reinforce integrity in their money choices.

[@Gordian1095]

A bold statement coming from someone that uses inside information from friends via hand written letters without traceability.

[@zstrizzel]

great video guys, keep them coming!

[@SmartInvestingToday]

Very interesting! Thanks for sharing💲💴💲

[@tenkloosterherman]

The most successfull investor of all times is a personality not to be dismissed. Listen to what the man says.

[@anderivative]

I read this as: the most successful INVESTMENT of all time is a personality not to be dismissed. Like your best use of your time is to invest in your personality. Heck yeah!

[@nandisaand5287]

Government pension funds should only be allowed to invest in low-overhead index funds and Government bonds.

[@Kurt-rg8jq]

Are banks normally giving PE firms leverage at 66% LTV?

[@ranjitmenon1175]

Not all PE funds are fradulent there are good and bad people like the coin with both sides we must carefully do the due delliegience of the PE funds before we invest 20 % should be the target ROI and you will win in 10 -15 years time frame the fees are absolutely bad part of the PE investment process i totally agree to this we should be avoiding this fees are vicious trap of the fradulent games

[@g.t.richardson6311]

Agree Pension funds got into this and real estate and hedge fund nonsense after 2009 They should have just stayed in the stock market and they’d be in a lot better shape

[@rogerwelsh2335]

Doesn’t Berkshire operate sort of like a private equity?

[@dogloverjb6873]

He is a very good person and glad to see him doing well.

[@mikebelnap3079]

I think he’s a terrible person who’s only accomplishment is riding others success and then acting like it was his idea from the start. Before you pile on me,answer me this question what did Warren invent?

[@opreadumitru1]

he is afraid of competition he used other people's money as well in his humble beginnings even if he inherited a modest business from his father also politician and businessman his value investing is a dead concept in the 21st century when so much disruptive new tech known and unknown emerges year after year a lot of big business will go broke if they ignore AI (artificial intelligence and automatisation) and emerging big economies competitors like Brazil India or Indonesia

[@JesusForKing2030]

@@opreadumitru1 who then do you recommend to listen to for investing, economic and personal finance views

[@jonclement]

I always hoped they'd implement more auditing at the big investment level: PE, etc. Seems like a better legacy project for buffet to change the industry rather then accumulating more returns.

[@berkit1]

Didn't Warren started initially as a PE asking friends to invest with him as he managed and invested for them?

[@ProfAzimov]

No?

[@maxguru4411]

BC partners app private equity fund. Is this app safe?

[@user-iz4xd2vw5o]

when/where was this?

[@maltesetony9030]

These guys are like those 2 guys in the high-up seats in the Muppets Show. And they talk great sense!

[@jbjab99]

Tony Robbins was on CNBC the other day saying Private Equity is great for him making money. The clip is on CNBC youtube channel.

[@lionra4523]

Thank you!

[@brianjacobsen8878]

The word private tells you everything you need to know about these criminals. That own judicial They all should be in orange jumpsuits.

[@jburron]

Back in 2006 I was saying in interviews (with pensions) that it’d be great to invest in private equity as it the smoothing makes the trade that much better.

[@carolyncvaldez257]

Better to invest in mezzanine or senior debt. Please study the capital stack. Much better to be the lender

[@EOCA]

Cool to hear Buffet has heard of Winnipeg

[@Hermanjackson89]

This is my fifth year after retirement. I've been following the 4% rule thing, but this isn't really how hard I expected things to be. I still have about $460k outside funds in my IRA to invest in stocks. Pls how do I take advantage of the market turnaround?

[@anu4j]

It doesn't matter what you think 🤔

[@stupidguy97]

What a wise observation. Now go apply it.

[@wahyuramadhan195]

Thanks

[@QueenQueen-yc3or]

What was that about calling a kettle black?

[@RockyP-xw8rd]

They still won’t say anything bad about 3G

[@eliawoke3548]

What’s 3G?

[@RockyP-xw8rd]

@@eliawoke3548 3G Capital - PE firm from Brazil that is Berkshire's partner in Kraft Heinz.

[@maestroadam]

Zingggggggg

[@paulh2468]

Master Yoda good to see still alive he is. Strong with the Cashish, I sense in him.

[@titrecords2294]

Somehow these men are as good with the stand up comedy as they are with investing! amazing sense of humor

[@dirtrabb2973]

In 2017 Trump gave Private Equity firms access to American workers 1.5T 401k funds , Trump also appointed Blackstone ceo s. Schwartzman as special council during that time

[@TeamH512]

Berkshire Hathaway is in private equity and venture capital

[@pierrex3226]

There are lots of situations where private equity makes sense. But then outsized returns get eaten away by competitors who like an easy meal, until there's no more free lunch. Ah which point, most are probably better off buying an ETF on the s&p because at least it's liquid. If your money is stuck for ten years and you end making the same return as listed equities, you kind of lost money. And that's assuming you make that much.

[@MrMajani]

Statler and Waldorf

[@oriocoookie]

wise words ... everyone has a motive .. find out what it is a understand how that motive can screw you .. paraphrasing

[@jasonmiddleweek1509]

Alternatives did very well in Australia last year, like 21% increase versus -20% for international shares. Good to have some private equity for diversification, if you can access it

[@monsterboomer8051]

You don't find this weird? In this economy? You better sell while they are up. You can always buy low again later.

[@bobbygetsbanned6049]

Or or or, you just do what you're supposed to do an invest in bonds. "Alternatives" are way too complicated for the standard investor to understand, and one year's performance means absolutely nothing.

[@calebhuiet473]

Brk owns mkl. One of the holdings of mkl is bn. It forest seem that they are too concerned with Brookfield

[@philiprohs]

Private Equity will suffer when non competes go away. FTC is finally helping the working man.

[@troyhoffman8619]

What?

[@belovedstrummer6140]

What’s non?

[@tech9803]

@Troy Hoffman There are proposals to ban non-compete employment contracts nationally that restrict people from changing jobs. CA already has this.

[@airops423]

Non-competes have already been unenforceable for a very long time

[@accountsequity5587]

How does this affect PE firms?

[@fantastikfanatic1900]

Except that deal with khc