The Spectacular Rise (and Imminent Collapse) of Private Equity
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#investing #privateequity #business
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The rapid growth of Private Equity has been blamed for pretty much every problem in America today, from mass layoffs to unaffordable homes. Some of this hate is totally justified, and some of it is just coming from second generation Wharton grads that didn’t land a summer internship at Blackstone. Whatever YOUR reason is for hating private equity, you will be happy to know that after a meteoric rise, the whole model that this industry was based on is now facing a spectacular collapse.
Private equity is very simply any investment into assets not listed on public markets. There are hundreds of thousands of highly profitable and promising businesses in America and millions around the world that you would never be able to buy using Robin Hood and some pocket money.
Private companies that are not listed on public stock markets don’t have the same reporting requirements so it can be extremely difficult and time consuming for investors to get a good idea of if a business is worth buying and how much it would be worth if it is. This is where private equity FIRMS stepped in as middle men to offer rich investors access to this untapped market.
If you were a billionaire, or the manager of pension fund their pitch to you was simple, they could give you higher average investment returns than you could get in the boring old stock market, your returns would be less volatile, and your money would be safer from market crashes. They could do this because they employed a crack team of the best business analysts in the world to do all the hard work of finding and buying a private company or alternative asset on your behalf and extracting as much money as physically possible out of it.
Sounds too good to be true right? Well, it is…
Private equity has pushed it’s business model too far and now it has trillions of dollars’ worth of assets that nobody wants, which sounds like a good thing for regular people who have been the victim of the layoffs and cost cutting that private equity has become famous for right? Wrong… There are four reasons why Private Equity is failing, and four reason why all of us are going to be the ones paying for it.
Private equity managers could reinforce this idea by only selling their highest performing assets furthering the illusion that everything in the portfolio was doing equally well. The very fact that these assets don’t have instantly updated price information actually made them even MORE attractive with certain fund managers because it let them claim to their own investors that their money was growing steadily even during turbulent markets. For a while this was true, after all something is worth whatever a buyer will pay for it, but now the investing public has realized that private equity firms are holding onto a lot of garbage that is going to be very hard to sell.
All investment carries risk and if this were just a story about financial managers delivering bad returns to rich investors after making big promises it wouldn’t need its own video, but a lot of Private Equity money is YOUR money, and if this convenient lie unravels, it’s not going to be the private equity partners losing their jobs. So it’s time to learn How Money Works to find out how Private Equity failed to live up to it’s promises and how we are all going to pay the price of that lie.
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uncle D
Capitalism never lives up to the promises it makes to those who don't own any capital and we're all always paying for it in the end. If you're getting "too big to fail" vibes, then you're only barely paying attention.
😊😊😊😊😊😊😊@@Liam-we8fm
Small philosophical question, Do you believe you are the body or the brain? Follow up question: if you're brainwash transported to another body are you still the same person. Extra follow-up question: What is your brain, an AI? Extra: In the future of infinity we there is a 99.999 percent chance of a person to be born blind deaf senseless tasteless and also have the inability to smell what is that person? Extra: Is it an AI just an amalgamation of electrical signal differing in layers and only reacting to outside stimuli? Extra: If what is said is true and we are just memory each infinite within a moment are you a different person, just a brain being transported to a body with memories?
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
The people you’re claiming don’t benefit wouldn’t have benefited with or without the private equity buyout. The business was failing before private equity came in, they just more efficiently manage the end of the companies life. Most likely allowing most companies to work there longer than they would have been able to do before.
@@tahirisaid2693no.
@@tahirisaid2693 kinda like boeing right?
@@tahirisaid2693 NOT true. They want people like you to believe that. They often specifically choose to take over well performing businesses in many cases so that they can rape them of their assets in an expedited amount of time, declare bankruptcy by using creative accounting methods (that are perfectly legal), effectively hose any other individuals or companies that they may owe any money to and then move on to their next victim. Bain Capital, a major private equity firm that's privately owned has been doing it for at least three decades. Toys -R- Us is a classic example of the "vulture capitalism" business model they've perfected. I worked as a business analyst in one for about three years until I couldn't stomach the rancid business practices any more and would be happy to share exactly how they do it if you would like.
Prisons owned by private companies is so insanely dystopian.
Don’t forget hospitals, senior homes, and child care
@@scc12321100% agree.
It’s also horrifying in terms of incentives
We love capitalism!!
So less than 5% in the United States?
If it's anything like '08, the government won't do crap until the crash comes, after which the companies get bailed out, executives get massive bonuses, and no criminal charges are pressed.
Fun fact. The guy who runs blackrock structured the bailout of 2008.
And we suffer
and don't forget: privatized profits, publicly paid losses.
Ya exactly. Biden was the vice president then, president now.
@@Xokzu Suffer? I see economic crashes as an opportunity to buy at low prices. I am heavy on cash right now for at least the next twelve months
So you're telling me those guys have been imposing austerity on society just to sustain the illusion of beating the market?
What's the implication here?
Anyone who uses the word austerity is a communist. I'm guessing you are a British trade unionist.
@@tomlxyz Fantasy: everyone is a millionaire Reality: everyone is broke and society on the brink of collapse
It seems the “free market” many corporations claim to support is not the reality they actually seek.
@@tomlxyz The implication that they've leveraged shallow financial instruments to white-ant the productive economy and everyone trying to just do something useful, productive, and get by, suffers, because a stack of speculators are more than happy to pull all the copper wiring out of the house & leave it a decrepit house-shaped husk if their balance sheets can show they're doing the most profitable thing to their clients - the stakeholders - actual customers be damned.
Private equity's ups and downs? It's like trying to assemble furniture without the instructions. Initially, there's unwarranted confidence, swiftly followed by utter confusion.
That’s a good way to put it
The moment I read this comment and thought, “yeah that’s something dumb to do,” someone actually called me asking me to send them instructions for assembling a desk since they forgot the instructions at home.
@@Luna-xz3ol lol
Bankruptcy needs to be reformed for these "investments". Let me go to the casino and keep money if I win, but just go bankrupt if I lose. What could go wrong?
When I notice an uncharacteristic drop in the quality of service from a business I’ve solicited for years I’ve started checking out ownership. You’ll never guess what I often discovered.
what is that?
@@Unleashed_Beasts private equity ownership to some degree.
You actually had to explain it. Lol
Private equity was always destined to fail. It’s the epitome of the currently endemic system of short-term profit chasing our entire global economy is based upon.
Bro you're 8yearold wtf are you yapping about?
Your cynicism is warranted but mind you private equity is a long term investment strategy. They're usually aiming to invest for 5-8 years
@@lemonhaze1506,I don't think he made his account when he was 1 year old
wtf thats not long term, its the time a polititian can stay at power and 1/10 of a human life. Longterm for an individual profit point of view. But from a social point of view long term should be more than 20 years, so older generations may not be alive to see the change and new ones would experience it.
@@BologneseBucket 5-8 years is very short time. Longe term investment takes 20-30 years to mature.
It really is amazing the amount of times I've seen the mentality of cutting workers to increase profit. It always backfires down the line. But a lot of execs do it anyways because the repercussions don't show up quick enough for it to effect their bottom line. Hospitals are such a great example. One in particular I used to work with refused to hire the proper amount of tech, and cut cost of living raises significantly. Things started to spiral really quickly as more and more people left since they were being forced to work crazy hours with crazy workloads. It got to the point that they just straight up didn't have the correct personnel to legally run the labs.
My mom works for a healthcare facility that seems to be going through this kind of process. They were bought out by a private company just under 2 years ago. Since then, they've cut staff, limited staff-to-patient ratios to below legal levels, hired on people without proper qualifications or certifications, inconsistently pay into the retirement and health insurance accounts (their staff health insurance plan wasn't paid into for several months), stopped paying different bills until right before they would lose service, and they closed off one of the units permanently rather than repairing it after some flood damage. They're a psych hospital so it's quite a bit easier for them to get away with illegal behavior than more mainstream hospitals. She has a job lined up with another place now and she's transitioning her schedule. The only reason she hasn't left yet is because they've run too low on staff that they've been offering pretty large bonuses for people to pick up shifts. But by the looks of it, they'll run it into the ground and will end up displacing dozens of people with medical needs. I think that anyone involved in buying up a healthcare facility and purposefully running it into the ground for profit should be charged with medical neglect and reckless endangerment charges for every single patient who has stepped foot in that facility during the time they owned it and that they should be imprisoned without the possibility for parole.
Their aim wasn't sustainability; it was swift entry and exit. You see, a boomer can acquire a company with debt, ruthlessly cut expenses, artificially inflate figures, and only face the consequences after reaping substantial profits. Furthermore, in the unfortunate event of bankruptcy, the boomer stands to benefit even further, courtesy of the generous golden parachute awaiting them. However, what they failed to anticipate is the widespread adoption of this approach by many other boomers, leading to the devaluation of the dollar through inflation and subsequent political repercussions. While they may have their millions, the value of those millions will diminish considerably. As boomers age, they'll inevitably reflect on where they strayed from the path, only to discover that the younger generation they let down won't be there to offer care but instead to reclaim what's rightfully theirs. While they may try to deflect blame, they'll eventually face the stark reality that their actions have caught up with them. This is evident as more and more boomers find themselves in on the side of the road. One can only hope that whatever gains they obtained were truly worth it in the end, but they're so surface level, they'll never see the errors of their ways and will only continue to cry and beg for help, for which it won't be received. They get what they deserve.
The day of the pillow can't come quick enough.
🤡
Unlike Boeing's SC plant where they hired managers from fast food chains, per John Oliver or Al Jazeera's reporting I forgot which.
Not just America! The same thing happens here in the UK. Thames Water got looted in the same way: Investors brought up the company, had it run huge debts to pay themselves dividends. Debts obtained by borrowing money from those same investors, so they can drain it by the interests. The genius move though? It's a utility. So even though the company is on the verge of bankruptcy, that can't be allowed to happen or else sewers will overflow and taps will run dry - so the government has little option but to bail the company out, including paying off those debts.
I noticed the same for energy companies in Finland. I guess the whole world is the PE companies playground now.
I will never forget learning how bad they have it over in the UK! I though America had it bad my god the UK for rentals and what the goverment can do to entire industries is lunacy mate! My heart goes out to you
How does buying and then indebting a public utility to yourself end without you in prison? Why was a public utility available to buy in the first place?
I kinda think in that situation the government should just seize the water company and leave the investors with an empty bag. F em, they took a chance and now they get to pay the piper for looting a utility.
@@hurrdurrmurrgurr That second one goes right back to the 1980's. Britain's government at the time was a very strong proponent of privatisation. Mostly on ideological grounds, though they didn't mind the influx of money to fund tax cuts either. As firm believers in the innovative power of private industry and the inherent wastefulness of government bureaucracy, they privatised everything they possibly could - including the water network. Also electricity, gas and telephone networks. As utilities are inherently natural monopolies though, they are still subject to price controls - government sets a limit on how much they can charge, because the customers have no choice in supplier.
the parasite kept growing until it killed the host
It's sad people don't get how accurately ecological theory applies to businesses, specifically how dominant capital parasitism is, why it's a problem, and what every company moving to subscription models means.
So great to see like minds on this! I wish economists and ecologists would swap research notes.
Is Capitalism crumbling
@@custos3249 Could you explain the problem of capital parasitism and what every company moving to subscription models means, please?
Capitalism is going into more frequent and severe cardiac arrest while our government works frantically to keep it alive at all costs. Capitalism is fundamentally unsustainable and it's being artificially kept alive beyond it's lifespan by those in our society who hold all the money/power. We can either end capitalism intentionally in an organized transition to the no-no word, or keep suffering through it's death throes until the inevitable catastrophic collapse. Based on what we can see of the US hegemonic power and culture, it's easy to predict where we're headed.
Too small to notice??? If you were one of the small towns that had your local factory liquidated or zombified via an LBO over the last 40 years (vs 20) you noticed.
Isn’t this often caused anyway from businesses failing to invest in technology to remain competitive, on top of more competition from overseas from lower wage nations?
@@SnorriTheLlamayes but that then becomes partially your own fault for not updating skills and equipment which then requires accountability for your own community
Damn straight
You mean one lf those small towns that voted for Ronald Regan and de-regulation? 🖕
I always thought private equity was as close as you could get to a pump and dump without going to jail.
Thats exactly what it is
Only challenge I’d have is private equity is vast and very different, more so than portrayed in this video. A PE house doing smaller £1m-£20m deals is very different to one doing £500m+ deals. If I’m the owner of a SME £1m profit business and want to retire, if I don’t want to sell to a big trade company in case they make everyone redundant and move production to another country (i.e. I care about my employees), I can sell to my protege in the business who is capable of running it. However, they don’t have £8m to buy my company as they are just a normal hardworking person, so the PE house and a bank steps in to help fund the difference.
@@SnorriTheLlama The PE firm is still gonna step all over your protege and force them to lay off more staff than the business can sustain and outsource as much as possible.
"its collapsing " :D "and we'll be the ones who have to pay for it" D:
Always are
It's a bit of disingenuous hyperbole. PE collapse would just be a repeat of 2008 - lots of people laid off as the termite-eaten driftwood propping their companies up are finally ripped away. But that's about it. And refusing to fix what's essentially mass corruption bc it'll suck for a few years is foolish to say the least.
It's socialism for massive companies and cold hard capitalism for everybody else.
That’s been the American way since Bush in 2008
@@themanhimself3 That would be socialism for all.... just because the masses get stuck with the bill doesn't make it capitalism, which doesn't exist in the USA anymore. You can't own private property and you have no right to your own labor.....your own means of production are owned/controlled by the state. That's the opposite of capitalism.
The current market/economy is unnecessarily tougher for boomers/senior citizens, I’m used to just buying and holding assets which doesn’t seem applicable to the current rollercoaster market plus inflation is catching up with my portfolio. I’m really worried about survival after retirement.
I envy you, I’m still trying to recover from losses I incurred in 2021/2022, who is this investment adviser you work with, I’m intrigued and I could use some quality guidance
Thanks a lot for this suggestion. I needed this myself, I looked her up, and I have sent her an email. I hope she gets back to me soon.
Look in to becoming an ExPat. over a million expats live in Mexico Guadalajara has amazing elder care for a fraction Plus... I did elder care in USA, I would never subject anyone I love to that abuse Mexicans still respect Elders
🚨 THIS THREAD IS ALL BOTS 🚨
@strnglhld I like to report the scammerz as "terrorists" so that way an actual humans has to look at it!
This happened because we deregulated the markets and refused to just say "no" to acquisitions and mergers. We need to regulate the industry and simply stop allowing mergers and acquisitions. We need MORE companies in the market, not fewer. The American economy is stagnating because every time a new company starts innovating, a larger company with more annual income than the GDP of some nations buys the new entrant and invariably ruins it.
That's become the entire point for most tech start ups. Get big enough for someone like google to notice then sell and consolidate the tech and customers into google.
A lot of that innovation only happens because the possibility of growing big enough to get acquired attracts the necessary capital to fund the innovation. Blanket banning acquisitions would kill that incentive.
Who is “we”? The American people didn’t deregulate anything. You have to understand that regulations will never work. The wealthy ruling class are the government, as in they’re the same people. And so they will just always roll back regulations for themselves, their friends and family. And there’s literally nothing you can do about it within the system.
Every single financial crisis was a very solid argument for having less spread of entities in whatever sectors and having things more concentrated. The issue is that no matter how large stupid private equity firms are, the individual (which is you and your small companies) is far far stupider and likelier to fuck it all up.
@@mikhacoffman4522 That's BS... When an individual fucks up, somebody else easily takes their place because their role in the economy isn't large. When a big company starts failing, it makes international headlines in newspapers and media, so other big companies and investors that were invested in that big company get worried about their money so they pull it out and make the problem larger and larger. That's why many big companies get bailed out by governments, especially banks and investment firms.
Immanent means within. Imminent means to expected to occur.
never knew immanent was a word. I thought that was that marshal mathers rapper guy
man the private equity market seems bloated, if only there where people who where experts on going into a company and fixing it up.
If only you could write English
@@lemonhaze1506 If only you could use a full stop at the end of your sentence.
Private equity is the fastest way to fuck up a strong company
@@daudimasinde6280 like some kind of psychopath?
Struggling to think of when an announcement of "under new management" resulted in changes that everyone loved ("greater profits" does not qualify)
Aight, I gotta "um actually" here. Schrodinger's cat doesn't have a 50% chance of being alive and a 50% chance of being dead, it is BOTH dead AND alive until it's observed. Physicists didn't "use" it to describe quantum mechanics, it's specifically about quantum mechanics, and was a critique of the current understanding of quantum mechanics at the time. It was also, as stated, a critique and was not meant to suggest that that's how things actually work. The cat having a 50/50 chance is how things would behave in the standard model, rather than quantum mechanics. The thought experiment isn't about the standard model though.
I believe it was used as a thought experiment to demonstrate the absurdity of the framework put forward by QM
@@amistrophy Yeep. Schrodinger thought it was silly to suggest that things would be both yes and no until "observed" and the idea brings up the question of what counts as an observer. How do you define consciousness? Is consciousness necessary for observation? Does a sensor count as an observer? There's a bunch of issues with the idea of wave function collapse and superposition he didn't like (though I don't know that those specific things were things he brought up, those are just the first series of questions off the top of my head).
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.
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.
I require suggestions on how to restore my portfolio and create more effective strategies in light of the huge declines. Where can I locate a professional instructor?
'Vivian Carol Gioia' is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thank you for this Pointer. It was to find her handler, She seems very proficient and flexible. I booked a call session with her.
Bots bots bots
I've held this view for a long time, and it seems to be an almost non-existent one in the American business landscape, but I very much feel that a truly good business shouldn't seek infinite growth and absolute maximization of profits. Rather, a good business should seek equilibrium. Try to reach a point where your turnover is minimized, your profits are stable, and you're firm in your spot in the market. Make changes not to increase revenue, but because those changes would be genuinely beneficial to customers and workers alike. A good business is a stable business, not an unstable one that's only concerned with short term profits and unsustainable growth.
the problem is communism based profit sharing also known as corporations. If you were a private business owner you would not be chasing each business quarter as if your job depended on it.
You are very wise to see it that way. Ideally that is the way it should be. Unfortunately GREED is the name of the game. They'll never do that.
Those businesses tend to get pushed out of the market by more aggressive firms. Playing fair and being ethical is typically not as profitable, and is therefore typically not conducive to continued success compared to your competition which will do anything to kill you
Growth gives companies a bit of wiggle room to innovate/keep up with competitors as well as a cushion in case of a downturn. It’s going to be less disruptive having to cut back if it’s a planned expansion you’re cutting instead of existing parts of your business
This channel is always "Economy is bad and the top 3 ways to fix the issue will make it worse, so will any." I love it.
Which brings you to “the economy isn’t bad, there’s just bad apples, and humanity and Americans have never lived better and had more opportunity, I just need views so I predict doomsday every Tuesday”
@@mikhacoffman4522 Current economic data doesn't agree with your statement
@@mikhacoffman4522You'll be singing a different tune once you're on the wrong side of it. Guaranteed.
@@mikhacoffman4522honestly this is this channel in a nutshell. It's just ragebait.
@@Aro9313 it also complains about fraud and lack of genuineness on corporations and how they force things on you often then proceed to advertise the dumbest and least useful tool to their audience. I overall like the content he puts out but it’s all directed for clicks and views which equals money in his pocket, just like the people he complains about.
Another problem with private equity is when they buy a company load it up with debt and pull out the money they put in and more and then let the company fail because it has to much debt. We have seen this over and over again. There should be claw backs when they do this.
yep, and only the "company" claims bankruptcy, none of the investors are left holding the bag, its debt on a massive scale with no-one to be accountable. completely baffling if you ask me.
If you think deeply those companies arent the bag, they are the dumpsters, where private equities throw out all their losses.@@plav032
Really need regulators to put a stop to the Golden Parachute escape hatch. Problem is they also benefit from it, so that's unlikely.
Isn’t all that debt usually put in by the private equity to actually pay for the business, so that money you talk about goes to the sellers of the business not to the private equity house? So if the business goes bankrupt then the private equity actually loses most of their money they originally invested.
@@SnorriTheLlama Depends, but often the PE company will put the debt into the company, so the end result is the company paying for itself and the PE company paying very little. Then they squeeze as much blood out of the company as they can to raise margins in the short term, give it to themselves with dividends, and let it go bankrupt alongside all the debt it owns.
2:48 The Benjamin Felix tweet translated: Private equity total of individual investment returns rely on unicorn businesses, more of a risky gamble than rather than mixing blue chip with a few blue sky (possible unicorn oneday) public equities.
The best editing in this niche by far!
I’ll pass the compliment along to my editors. they work really hard on every video.
@@HowMoneyWorks yeah I remember watching your video about your own KZhead channel and you described how you have to pay your editor well so they can do a good job and be motivated. They are killing it?
It'll be really interesting to see what kind of monstrous shifts happen in the market if (when) private equity collapses. Just like you mentioned in the video, a lot of people's money is tied up indirectly in private equity, so it could end up being highly consequential.
Hopefully it's not like in 2008. Doubt many see the underlying risk until everything comes down. Rich people will leave first and pension funds and states will be left holding the bag. Also, private equity kept racking up debt in bought firms as well while sucking them dry. So many companies may be at risk as well.
Hopefully it will be more beneficial for the country. Since they wont control layoffs
If not beneficial for the country, there's RAID THE RICH.
My dad is a long time oil and gas CEO/COO. 5 companies all sold to private equity. Takes the buy out and leaves. Private equity kills long term planning and pushes profit over responsible operations
You got the schrodingers car example wrong btw, the cat isn’t equally likely to be both dead or alive, but the car is both dead and alive simultaneously until someone opens the box.
Or is it both a cat and a car at the same time? Interesting…
And another thing, Schroeders cat wasn't supposed to be a thought experiment, it was supposed to be a critique of quantum mechanics, because if quantum mechanics is true, then the cat would be both death and alive, which is bullshit (to him at least).
The thought experiement doesn't actually describe quantum mechanics properly, though. Quantum particles are probabilistic, which means no, they're not in several places at once. They could potentially be in several places at once, until you observe them and they are in that one spot at that moment. So the cat would be potentially either alive or dead, until you observe it and it's one or the other.
Can confirm, I left a car in the parking lot, and came back to see only a cat.
The cat doesn't go into superposition. In the usual setup, you have a Geiger counter measuring an atom that decays. Once you measure the atom, it takes on a definite state and the rest of the process is governed by classical physics. The cat can observe whether it's dead or alive before you open the box.
How many businesses have failed and the upper management got a gold parachute ride to the next business to do the same? I’m not saying if you fail once it’s over… but I’ve got a feeling the business strategy of failing and paying out along the way is a real issue.
Which generation was this?
You'd think, but "failure" to the public, and to a company are two different things. The sad part is, our system is set up so that the rich basically can't lose. Even when a company fails, everyone on top most likely benefits from it happening. They'll always find a way to spin it where they don't lose
@@pauld.b7129 Shocking. It seems like we're part of a community, and fostering a society built on strong morals and trust could potentially benefit everyone. However, there's a prevalent desire for individuals to be degenerates instead and wonder where it all goes wrong.
@@Transbloop well a company’s only goal once they go public is to make money for shear holder value. It’s not to the customers, it’s not to the employees. If they run the company into the ground it’s okay because they milk money and take out loans along the way. I truly think we will see Tesla go down in the coming years. Everyone’s gonna act surprised tho and attack me for thinking that.
Shouldn't the photos of Bain& Company be Bain Capital? The consulting firm doesn't do PE; but Bain Capital does. They have different Logos
This happens in every single one of his videos.
Bain & Co. is a management consultant firm. Bain Capital is a private equity firm. This mistake has been made before on this channel. Please heed feedback from the comments section every once in a while.
I’m a nursing home nurse these companies will come in buy up a nursing home cut staff and ignore patient safety I had one place try and tell me having 50 patients at a time was standard practice I got fired for trying to unionize lol
Every now and then, I am reminded that this world is built on a giant ponzi scheme
When the last private equity investor was finished with our company it was raining through the roof, we had lost long-term customers due to short-sighted price policies, no investments with a payback period of mor than two year had been done (which covers basically all of the critical heavy duty equipment) and a lot of talent had left.
I realized that the secret to making a million is saving for a better investment. I always tell myself you don't need that new Maserati or that vacation just yet. That mindset helped me make more money investing. For example last year I invested 80k in stocks and made about $246k, but guess what? I put it all back and traded again and now I am rounding up close to a million.
IF everybody made money off passive income / letting money work for them, who'd do the real work? That's what's happening to the world today, money is doing too much work!
Thanks for continuing updates I'd rather trade the stock market as it's more profitable. I make an average of $34,500 per week even though I barely trade myself.
I'm favoured financially, $32,000 weekly profit regardless of how bad it gets on the economy.
How ..? Am a newbie in crypto investment, please can you guide me through on how you made profit?
Thanks to Mrs Deborah Davis.
The economy is favorable to those who where able to get themselves into one investment or another, most people see investment as something big they can’t participate in because they’re too scared to venture into one. Today we have a lot of opportunities to invest in different commodities, stocks, cryptocurrencies and so much more but some people just sees this as a challenge and shy away from it
So true, thanks for bringing this up to my notice, the truth is this economy wouldn’t be so bad if people indulge themselves more with various investments rather than just depending on their stipends and savings, because the economy wouldn’t always remain as it was
It is good we acquire as much wealth as we can, most people fail to understand what it takes to become wealthy, they want to become wealthy overnight by thinking their savings will help them attain that, they fail to understand that investment is what truly builds wealth. I advise you all key into investing and earn side money than depending on your savings if you truly want to be wealthy
The philosophy of the rich and the poor is this " the rich invest their money and spend what is left, the poor spend their money and invest what is left" Poor people think about what they can buy with their money, rich people think about what they can invest in with their money.
Because of the economic crisis and the rate of unemployment, now is the best time to invest in crypto and make money 💯. But you have to invest with the right broker. Anyone here that Know more about crypto currency let talk more about it
There are series of distinct market phases that occur between the market peak and low
The biggest problem with Private Equity as you stated at the end is that they are never long-term investors. Although the legal structure of Berkshire Hathaway is similar to private equity, the difference in strategy is very different. I think private equity would die if pensions would stop investing in them.
I think a lot of pensions have at least started that process, because they are beginning to stagnate.
This goes the same way so many times. They get to privatize their profits yet all of their losses get bailed out by the taxpayers
Yet, boomers say they're not fond of socialism. Sad.
Tax the stock market and or raid the rich
@@user-vv8kf3xx6k God, can you imagine the fit they would throw if that happened? Also, how much of the economy is propped up by the stock market?
Why not go for a mittlestand approach to economy like Germany?
This video was a nice change of pace. It slowed down the experience comparative to the recent 15ish videos. Keep making good stuff and these little variety changes feel very nice to watch!
The next video: the rise and fall of "financial armagheddon" youtubers 😂
Please yes. Someone make that video
I'd love to see you react to all the folks who had their private pensions cut thanks to private equity. Or outsourced & their brand wrecked (hi Boeing bros!). Or both.
you guys used the bain logo but it;s the wrong bain. bain capital is the pe firm. bain & co is the consulting firm. surprised the pe people in teh comments failed to catch this.
I was surprised but this too. Maybe the video editor picked the wrong logo.
@@ManofKituiYeah that's a good point, video editor likely doesn't have the domain knowledge and put the wrong logo.
Why does it feel like the people with all the money have just spent the last 15 years trying to come up with increasingly stupid ways to commit securities fraud without committing securities fraud?
Schrodinger's cat is misused in this video; Schrodinger used this as an example of the absurd idea that something could be in 2 states simultaneously until observed, which logically is impossible, but physicists were theorizing that this is how fundamental particles worked, and he made up this cat metaphor to show how bizarre the logic was
When there are rumors that your employer is bought by private equity it's time to look for another employer. Even if you keep your job, they pay you less expecting more only to line their pockets. Even if they don't poison the well by cutting all sorts of corners. No if private equity coms, run for the hills. One of the best decisions I made in my life was, when my then employer was sold to one of those parasites, they offered generous severance packages (because firing isn't as easy in Europe). I took one and run for the hills even without a job lined up. The company today is a husk and the few people I know still working there are absolutely miserable.
So in other words, yes, private equity IS the bloody worst.
All of you youngsters use this term 'private equity'. Us old farts still use the original term... 'loan sharks'.
And it's not a new thing - this is more or less what the movie "Wall Street" was about back in 1987.
Awesome insight. This was a clean presentation of the timeline and natural effects of the industry
Props to the editors, they are very much indeed increasing “shareholder value” (subscribers viewing experience)
FACTS hahahaha
2:18-2:35 Dude, you can't leave out the part about Schrödinger's cat's living or dying being dependent upon radioactive decay! In the original thought experiment, there is a radioisotope and a Geiger counter; if the Geiger counter detects radioactive decay, it releases a hammer which smashes the bottle of poison which kills the cat. Schrödinger's thought experiment was meant as a reductio ad absurdum of the idea of quantum superposition since, he argued, if a radioisotope is in a superposition of decayed and not-decayed until it is observed, then any system dependent on that radioisotope's decay-or-not would also itself be in a superposition until it is observed, hence the dead-and-alive cat; it was taken as read that a dead-and-alive cat is an absurd notion.
awesome insight👍, The stock market is more volatile than ever. recently went "all in" and bought up $80k worth of ETF's & individual stocks, my aim is to take advantage of this S&P 500 downtrend, what could be accurate predictions moving forward? Open to chat.
There are tools that allow investors to invest in companies before they hit the stock market, multiplying those potential gains that otherwise wouldn’t be available after the initial public offering. That’s what I am up to, steer clear from the equities and bond market, my humble opinion.
I agree, I have used the same money manager for close to 4yrs who have been involved in launching IPOs. We got in fairly early with a modest amount of money. Then it mushroomed like an atomic bomb. We had over 4 m dollars after GME profits in 2020/2021. Inflation has eaten away at the nest egg but we are lucky to have Monica look after it diligently like she has done the past 3-4 years.
Definitely private investing is the way to go. Our government keeps lying. I’d like to earn like that is it a private equity fund or mutual funds investing?
wow impressive, how were you able to achieve this despite the downturn?
this is incredible! how can I vet your advisr, mind sharing info, if you please?
Greed. What can go wrong?
Lmao my favorite part. Not "Less Cops". "Less Food". Love it.
Can’t believe I caught this so early! Good stuff!
Back in 90s got job in company that had a lot old equipment snd needed modernization, that didn’t have much money even though it made a decent profit. At one point I said to coworker “They run this place like they are trying to pay off a bunch of debt.” Whereupon my coworker says “They are.” Sure enough, company was part of conglomerate that was spun of from another bigger conglomerate purchased by a wealthy investor. He kept one part, recapitalized the rest which was launched onto the NY stock exchange as a new company. However, that new company was saddle with a lot of debt, which of course paid for the part the investor kept. A great lesson.
Do a video on Georgism! If you want to learn how money and wealth actually works, nobody explains it like Henry George in Progress and Poverty.
Solve all problems in the world with one weird trick. Rentseekers hate him
Awesome video and to finally see these bullies run out of things to devour is great. My sons were trying to buy homes when we had the 2.5% APY 30 year fixed mortgage and every time they found a home, a company like BlackRock would swoop in and buy up everything by overpaying and then those companies tried to turn everyone into renters. My sons ended up buying some land, doing the work to put in the water, plumbing electricity ect then... No $hit they both bought homes from Amazon (And no I am not making this up). Was it what they wanted no, but they are doing great now. And to you Private Equity companies F.U. I hope they go under.
I love the smooth jazz in the background while we talk about why our economy is collapsing 🎶 🎷
You should do a follow up video on private credit. I think this where private equity industry is headed. Private credit its a very interesting asset class well suited for PE firms and addresses a real problem for businesses
Its the same with every market strategy: its great till everyone else does it.
Earliest ive ever been. Honestly this is a bit worrisome because im in finance and a lot of those people might have to flood over to my field
Great information. My guess is that the crash of private equity will be only slightly less painful. Videos like this is what everyone should be watching so this can be prioritized (to lessen pain even more).
Thus is such a great insight into the behind the scenes considerations. Well-explained and illuminating!
I don’t work at PE funds but I used to audit them. I think you’ve only talked about one side of PE funds tho. I really think PE funds are one of the many reasons that US is ahead of the Europe and the rest of the world in technology innovation. SpaceEx has PE investors. Microsoft is the largest PE investor of and maybe even a controlling board position in OpenAI. They’re providing the capital and increase the operating efficiency of a portfolio company (hence reduce headcount). Yes, people get fired out as a result (but so do public companies like Meta or Alphabet). That’s why no one should be complacent/rely solely on government protection and should always invest in continuous learning to make yourself competitive in the labor market (I speak from my experience as I’ve experienced a layoff myself).
This is a good point. Essentially all successful US tech startups of the last 20 years were funded by private equity.
This is a good point. Essentially all successful US tech startups of the last 20 years were funded by private equity.
What is the value of space x? What significance does it have in the face of so many problems being faced? Is it an investment in pride or is it an investment in reality? If it is an investment in reality, has the problem of poverty swept away in the USA? The reason why US is ahead is because no other country values greed as much as in the USA, and since the current economic model of the world is heavily reliant on greed, it all about who is the most greediest out of the bunch, as the greediest one takes the cake in this animalistic paradigm. You said you should always invest in continous learning, well then learn how destructive greed can be. No matter how much a stock can return you on a position, it doesn't matter if your living quarters are reduced to rubble. For investing into a future that does not benefit mankind is not worth the returns. The best way to tell if it benefits mankind is if it aligns with the Truth who is King Yeshua of whom fulfilled the Law, something that no man has been able to do, in all of history
Can't believe I'm this early for a video of yours for once.
With Schodinger's Cat, it's less that there is an equal chance of it being alive and dead, instead it is Both alive and dead at the same time. A concept known as superposition
Long-term follower of Ben and yourself on the rational reminder. Loved your podcast with them! And I love the shout outs!
Looks like Private Equity is going private
Schrodinger's cat was an antipattern joke for people who haven't studied physics and think they're smarter than they are.
Looks like we found Schrodinger's wanker.
I enjoyed learning about the history and evolution of private equity, from its early days as a niche strategy to its current mainstream status. The insights shared here will definitely inform my investment decisions in the future.
The audio mixing has improved in recent weeks. Good work.
Correct me if I'm wrong. But this seems like a barely legal version of a ponzi scheme
Bain & Company is a consulting firm. Bain Capital is the PE firm…
The analogy where a backdoor was built in to watch back doors was on point.
Where else can ivy league MBA's who couldn't make it into useless consulting firms go to destroy companies if not private equity?
Indjun management
Private equity is just investing in companies not on the public market. As with any investment vehicle, outsized returns attract investors. Competition increases, markets get saturated. Continuing to make outsized returns is getting more difficult but private equity is not going anywhere. There is too much private capital out there and there is still more potential for returns than in the stock market for most people. The same exact thing is happening to real estate.
Wait so this is why so many layoff in many private company even tho their profit increase?
Most companies provide services(labor intensive) instead of physical goods(capital intensive), making the labor cuts a short run way of increasing return on invested capital. 😅Labor are the guards on the wall of a castle making sure barbarians do not pontoon across the company's "competitive moat." Get rid of labor and enjoy the pretty castle: Shame if some raiders happened to it.
No, they're just fucking poor people for profit. Standard procedure.
Just saw the title. Haven't watched, but here's to hoping 🤞🏽
In Spain private equity companies are popularly known as fondos buitres or vulture funds, they swooped in, snap up unsold housing at knock down prices, and put them on the market at a huge markup. That's how tens of thousands of new builds stay empty when there's a housing shortage. Vultures they are.
Recent downturn is because of interest rates (~40% drop in deal volume/value according to Bain from recent peak), but definitely some of these systemic things exist. Every good deal is bid up, etc. I'm not sure it will "collapse" though, it may be too big to fail at this point, and perhaps people are just going to view it as a form of diversification with slightly (not significantly as before) higher returns than the general market. The market readily accepts the existence of hedge funds and mutual funds, the majority of which don't vastly outperform after fees. Over time this may mean that fees could decrease. I do think that once rate cuts hit though there should be more movement in the market because remember PE currently is sitting on record amounts of dry powder that is a burning a hole in everyone's pocket
I think you meant to say they use mark-to-model to value their assets.
2 videos in 3 days? it's an early christmas
Can you do a video specifically on PE and their impact on the insurance industry? It’s crazy what is happening in that industry.
2:40 Ben Felix is definetly a great creator - I mean it's quite a steep learning curve, but very informative.
Been loving your vids man!
Thanks that's always nice to hear!
I’d argue “Maximize shareholder value” is the root of all evil
The small company I first worked at was bought by a private equity firm. They juiced the company to death. No raises for the two years I worked there. Insane unsustainable weekly income requirements, starting workers made half the market average wage. When the company finally went under and laid everyone off, it almost felt like a relief. Then, like justice, the firm was on the receiving end of a national scandal that forced them to change their name after getting sued an astronomical sum due to deaths on the job resulting from their cost cutting negligence.
My anecdotal observation is that private equity isn’t going to last because they simply pay too much for the assets they acquire. I am in the insurance business and see all the time the private equity acquisitions of brokers. They use an accept highly suspect EBITDA numbers. That calculation is nothing more than a fiction that you can create move, enhance or diminish with a couple of entries and button clicks. In this arena, I agree with the late Charlie Munger, who called the practice of EBITDA evaluation BS. So these private equity companies keep paying higher and higher prices for assets that in truth, do not appreciate beyond the EBITDA but they all fictionalize.
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6 minutes ago is crazy
Throughout your video you always used the Bain & Company Logo, which is the Logo of the MBB Management Consultancy. The private equity firm is called Bain Capital
Anyone who buys up hospitals, clinics, prisons, nursing homes, or other places where people have health needs and then purposefully cuts essential staff, services, and medications to squeeze out as much profit as possible should face criminal charges and never see the light of day again. My mom is a nurse for a psych hospital that is about to go under and when it does, it will displace dozens of people with extreme medical needs. Any individuals involved in these schemes should be charged criminal patient abuse, neglect, and reckless endangerment for every single patient and inmate of every facility they run these schemes on. Nobody who is willing to let patients suffer medical neglect or even die so they can squeeze out another penny deserves to ever be integrated back into society. (Also as a note, you mentioned Private Prisons. While Private Prisons are reprehensible, government-owned prisons are already inhumane and barbaric. Even the Bureau of Prison's Medical Centers are hotbeds of corruption and human rights abuse (and despite being "Medical Centers" are unaccredited and full of aspestos, mold, exposed lead, roaches, and whatever else you can think of))
Communist!
What is the best strategy to take advantage of the current market. I’m still deciding whether to diversify my $400k stocks portfolio? how do I redistribute stocks in my portfolio to hedge against crash?.
will advice you get yourself a financial advisor that can provide you with entry and exit points on the share/etf you focus on.
Exactly, a good number of people discredit the effectiveness of financial advisor, but over the past 6years, I’ve had a financial advisor consistently restructure and diversify my portfolio and I’ve made over $3 million in gains… might not be a lot but i'm financially secure and that's fine by me.
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?.
Nicole Desiree Simon is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
I once looked a fund that claimed access to pre-IPO tech companies for retail investors. Took less than 1 min of investigation to discover I would have little to no insight into the numbers.
This is hilarious. As soon as everyone knows the scam, the scam no longer works.
Private equity done right is simply a way for medium sized private companies to get their hands on liquidity to expand without being burderned by debt, this is is the bright side of it, actual investing in a growing business
And then there's now. Private equity buying companies with debt, pushing that onto the company, sucking it dry and leaving it to die in debt, buying the next company and repeating the cycle.
@@xman7695 Actually, what you said is more the corporate raiders style of the 1980s than the current PE practices. Yes they are overpaying because debt was super cheap until recently, but then so is everyone for housing and cars. Cheap money f'd up everything, not a PE exclusive
@@xman7695 Thats because LBO's exist.
You’ve incorrectly used Bain & Company logo (consulting firm) instead of Bain Capital logo (private equity firm). They’re completely separate entities and Bain & Company doesn’t do investments.
It’s the most obvious outcome of the most blatant greed and short sightedness. It’s insane how out of control private equity has been allowed to become.
Love it when the people win over corporates. This is the fall of corporates world wide.
Let me know *when* the people win ...
Other countries have stronger financial regulations.
Are they begging for a french revolution? Because thats how you get a french revolution.