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I would argue the CalPERs does not know the return of its private equity investments because private equity is a recent phenomenon and one that locks up funds f

by mjfl 2y ago

I would argue the CalPERs does not know the return of its private equity investments because private equity is a recent phenomenon and one that locks up funds for 4-7 years, and I would predict that its realized returns will be disappointing. The financial literature is a crapshoot filled with selection bias that I wouldn't consult for anything. Rather, I will rely on my personal experience which is: private equity is a racket.

SideQuark 2y ago
I don’t understand why so many people in this thread keep posting trivially easy to check incorrect claims. Private equity, in the modern form, has been used since before 1950. It’s trivial to check. CalPERs provides detailed annual reports with returns broken out. No one runs a nearly half trillion fund and “does not know the return of its” component investments. I’m glad you trust your limited, obviously emotionally driven, demonstrably lacking in knowledge at every comment in this thread, beliefs over market data. You demonstrate to others why so many people are not going to do well handling their own pensions compared to those using proper methods.
- mjfl 2y ago
  You misunderstood the meaning of what I said. Private equity has existed for a long time, but as an asset class has it had a huge boom for the past 20 years, gaining market share that it never had. This trend has been recognized by several media outlets. This article in Moonfare shows the private equity AUM has roughly tripled in the past 15 years and the number of private equity funds quadrupled between 2012 and 2021 [1]. This article by Citizens Bank documents the exponential rise in the number of companies owned by private equity while public has remained flat [2]. Another article discussing the exponential growth can be found here [3]. I guess I wasn't super clear, but anyone who's worked in the actual industry would have understood what I meant. And the fact that you didn't suggests to me that you don't have a lot of practical experience, or if you do you are stunningly aloof to the workplace discussions of your colleagues. People who actually work in the industry would also be familiar with the fact that, yes in fact people who run funds with a half trillion under management can be stunningly unsophisticated and simply go with flashy new trends - like private equity! This has been commented on in several industry podcasts. And again, your reference to academic studies in the financial field which, despite some people like AQR using them in their marketing, most practitioners seriously discount due to the severe problem of selection and survivorship bias, makes me believe you actually don't have any idea what you are talking about. Actually you've said a lot of absurd things: > Hedge funds don’t magically take your money any more than Santa Claus takes your money. Again, people don't generally control what their pension fund invests in. [1] https://www.moonfare.com/pe-masterclass/private-equity-market-size https://www.moonfare.com/pe-masterclass/private-equity-marke... [2] https://www.citizensbank.com/corporate-finance/insights/private-equity-trends.aspx https://www.citizensbank.com/corporate-finance/insights/priv... [3] https://www.dakota.com/resources/blog/private-markets-on-the-rise-whats-next-for-private-equity-investors https://www.dakota.com/resources/blog/private-markets-on-the...
  - SideQuark 2y ago
    You completely miss the reason it's grown, and complain through repeated ignorance. It's grown because it has proven itself, tends to outperform public equity, and provides asset diversification. It would be dumb for any asset manager to ignore the evidence. I'd certainly fire any asset manager that trades on voodoo while ignoring such signal. As to working in the industry, you should check my comment history. I've done modeling and fundamental algorithms for a huge range of industries, including new pricing algorithms I developed for investment houses. I have a PhD in math, degrees and grad work on CS and physics, taught graduate mathematical econ at a top 50 univ, and have done significant work and consulting for finance places. So I sorta do know about this. As to your implication that you do work in this industry, you clearly don't. Just checking your comment history though shows you doing this level of uninformed commenting on topics and people correcting you just like here, going back a far as I checked. So no, you have no idea about the industry any deeper than someone who read a blog post. > This has been commented on in several industry podcasts. OMG! Commented on in podcasts? Now I believe. For complaining that others can be unsophisticated, you cite this drivel as evidence, against the peer reviewed, track record researchers I posted above? It figures. Keep cherry picking siloed low information sources to bolster your beliefs. I'll take widely sourced, properly done analysis. Go ahead and post more. This has more than run it's course
    - mjfl 2y ago
      [flagged]

by mjfl 2y ago

SideQuark 2y ago

I don’t understand why so many people in this thread keep posting trivially easy to check incorrect claims. Private equity, in the modern form, has been used since before 1950. It’s trivial to check. CalPERs provides detailed annual reports with returns broken out. No one runs a nearly half trillion fund and “does not know the return of its” component investments. I’m glad you trust your limited, obviously emotionally driven, demonstrably lacking in knowledge at every comment in this thread, beliefs over market data. You demonstrate to others why so many people are not going to do well handling their own pensions compared to those using proper methods.

mjfl 2y ago
You misunderstood the meaning of what I said. Private equity has existed for a long time, but as an asset class has it had a huge boom for the past 20 years, gaining market share that it never had. This trend has been recognized by several media outlets. This article in Moonfare shows the private equity AUM has roughly tripled in the past 15 years and the number of private equity funds quadrupled between 2012 and 2021 [1]. This article by Citizens Bank documents the exponential rise in the number of companies owned by private equity while public has remained flat [2]. Another article discussing the exponential growth can be found here [3]. I guess I wasn't super clear, but anyone who's worked in the actual industry would have understood what I meant. And the fact that you didn't suggests to me that you don't have a lot of practical experience, or if you do you are stunningly aloof to the workplace discussions of your colleagues. People who actually work in the industry would also be familiar with the fact that, yes in fact people who run funds with a half trillion under management can be stunningly unsophisticated and simply go with flashy new trends - like private equity! This has been commented on in several industry podcasts. And again, your reference to academic studies in the financial field which, despite some people like AQR using them in their marketing, most practitioners seriously discount due to the severe problem of selection and survivorship bias, makes me believe you actually don't have any idea what you are talking about. Actually you've said a lot of absurd things: > Hedge funds don’t magically take your money any more than Santa Claus takes your money. Again, people don't generally control what their pension fund invests in. [1] https://www.moonfare.com/pe-masterclass/private-equity-market-size https://www.moonfare.com/pe-masterclass/private-equity-marke... [2] https://www.citizensbank.com/corporate-finance/insights/private-equity-trends.aspx https://www.citizensbank.com/corporate-finance/insights/priv... [3] https://www.dakota.com/resources/blog/private-markets-on-the-rise-whats-next-for-private-equity-investors https://www.dakota.com/resources/blog/private-markets-on-the...
- SideQuark 2y ago
  You completely miss the reason it's grown, and complain through repeated ignorance. It's grown because it has proven itself, tends to outperform public equity, and provides asset diversification. It would be dumb for any asset manager to ignore the evidence. I'd certainly fire any asset manager that trades on voodoo while ignoring such signal. As to working in the industry, you should check my comment history. I've done modeling and fundamental algorithms for a huge range of industries, including new pricing algorithms I developed for investment houses. I have a PhD in math, degrees and grad work on CS and physics, taught graduate mathematical econ at a top 50 univ, and have done significant work and consulting for finance places. So I sorta do know about this. As to your implication that you do work in this industry, you clearly don't. Just checking your comment history though shows you doing this level of uninformed commenting on topics and people correcting you just like here, going back a far as I checked. So no, you have no idea about the industry any deeper than someone who read a blog post. > This has been commented on in several industry podcasts. OMG! Commented on in podcasts? Now I believe. For complaining that others can be unsophisticated, you cite this drivel as evidence, against the peer reviewed, track record researchers I posted above? It figures. Keep cherry picking siloed low information sources to bolster your beliefs. I'll take widely sourced, properly done analysis. Go ahead and post more. This has more than run it's course
  - mjfl 2y ago
    [flagged]