Anna's Deep Dives

_{Just facts, you think for yourself}

I stumbled on a stat that blew my mind.

In 1996, there were 8,000 public companies you could buy.

Today? There are less than 4,000.

The menu has been cut in half.

Meanwhile, the "smart money" has almost entirely left the building.

Look at the Yale Endowment. They manage over $40 billion and are widely considered the best investors in the world.

Do you know how much they keep in standard U.S. stocks?

Less than 10%.

So where is the rest of the money?

It’s in Private Markets.

This is a $13 trillion ocean that doesn't show up on your brokerage app.

For decades, this was a walled garden. If you didn't have $5 million and a secret handshake, you weren't invited.

But the velvet rope is finally dropping.

I spent weeks analyzing this. I wanted to know if the returns are real, or if it’s just a sales pitch from Wall Street.

Here is the honest truth.

1. The Pond is Drying Up If you only buy stocks, you are fishing in a shrinking pond. The best companies stay private longer (Uber waited 10 years). We break down why the public market is vanishing and what that means for your portfolio. [Read Section 1: Why the Public Market is Drying Up (Premium)]

2. It’s Not Just "Shark Tank" Bets People hear "private equity" and think of risky bets on the next Facebook. That is actually Venture Capital, and it's a tiny sliver of the pie. Real private market investing is often boring. It’s owning the fiber optic cables under your street or holding the debt of a profitable software firm. It’s unsexy, but it pays.[Read Section 2: The Four Pillars of Private Markets (Premium)]

3. The "J-Curve" Stomach Ache Here is the bad news. You can't just hit "sell" on your phone if you get spooked. Your money is locked up, often for 7 to 10 years. And because of fees, you actually lose money on paper in the first few years before the wins show up. We explain why the pros tolerate this. [Read Section 3: Mechanics, Lock-ups, and the J-Curve (Premium)]

4. Do The Returns Justify the Fees? Fees here are high. The standard is "2 and 20" (2% management fee, 20% of the profits). Does the performance actually beat the S&P 500 after you pay the managers? We looked at the historical data. The answer isn't a simple "yes." [Read Section 4: Performance vs. Public Markets (Premium)]

5. You Don’t Need to Be a Billionaire Anymore It used to be a club for pension funds. Now, new platforms allow individual investors to write smaller checks ($10k or $25k). But just because you can invest, doesn't mean you should. We look at the new tools opening the doors and the risks they don't tell you about. [Read Section 5: The Democratization of Access (Premium)]

6. The Real World: Jobs, Taxes, and Scrutiny We can't talk about the money without talking about the impact. Does Private Equity create jobs or destroy them? (We found data for both). We tackle the tough questions: the mountains of debt, the "carried interest" tax loophole that makes billionaires pay lower rates than their secretaries, and what happens when the regulators finally wake up. [Read Section 6: The Evolving Landscape (Premium)]

This is the asset class everyone talks about. Now you’ll actually understand how it works.

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Table of Contents

^{(Click on any section to start reading it)}

Section 1: The Great Divergence – Why the Public Market is No Longer Enough

1.1 The Broken 60/40 Model: Why Traditional Portfolios Are Failing

• The Correlation Crisis

• The Volatility Tax

• The Yield Starvation

1.2 The Shrinking Public Universe: Where Did All the Companies Go?

• The "De-equitization" Trend

• The "Stay Private" Phenomenon

• Value Capture Shift

1.3 Defining the "Escape Hatch": The Private Market Ecosystem

• Mapping the Landscape

• The Illiquidity Premium

• From "Alternative" to "Core"

1.4 The Institutional Advantage: What the "Smart Money" Knows

• The Yale Model Explained

• Information Asymmetry

• Governance Control

Section 2: Private Equity – The Engine of Capital Appreciation

2.1 Buyouts: The Art of Corporate Surgery

• Leveraged Buyout (LBO) Mechanics

• Operational Engineering

• Multiple Expansion

2.2 Growth Equity and Venture Capital: Funding the Future

• The Lifecycle Distinction

• The Power Law of Returns

• Innovation Monopoly

2.3 The Secondary Market: Liquidity in an Illiquid World

• LP-led Secondaries

• GP-led Restructurings

• Mitigating the J-Curve

Section 3: Private Credit – The New "Safe" Yield

3.1 The Void Left by Banks: A Regulatory Consequence

• The Retreat of Traditional Banking

• The Rise of Non-Bank Lenders

• The Flexibility Factor

3.2 Direct Lending: The Bread and Butter of Private Credit

• Senior Secured Loans

• Floating Rate Protection

• Covenant Protection

3.3 Specialized Credit Strategies: Distressed and Mezzanine

• Mezzanine Financing

• Distressed Investing

• Special Situations

3.4 Comparing the Yield: Private Credit vs. Public Bonds

• The Spread Premium

• Default and Recovery Rates

• Mark-to-Market vs. Mark-to-Model

Section 4: The Mechanics of the "Lock-Up" – Understanding Structure

4.1 The Lifecycle of a Fund: The J-Curve Explained

• The Capital Call System

• The "Valley of Tears"

• The Harvest Period

4.2 Fee Structures and Alignment of Interest

• The "2 and 20" Model

• The Preferred Return (Hurdle Rate)

• Skin in the Game

4.3 Measurement Metrics: Forget the P/E Ratio

• IRR (Internal Rate of Return)

• MOIC (Multiple on Invested Capital)

• TVPI vs. DPI

4.4 Vehicles of Access: How HNW Investors Enter

• Fund-of-Funds

• Co-Investments

• The Democratization Vehicles

Section 5: Risks and Shadows – The "Insider" Critique

5.1 The Valuation Debate: "Volatility Laundering"

• The Smoothing Effect

• The Lag Effect

• Fair Value Audits

5.2 The Leverage Risk: Investing in a High-Rate World

• The Cost of Debt

• Refinancing Walls

• Interest Coverage Ratios

5.4 Manager Dispersion: The Selection Risk

• The Gap Between Best and Rest

• Persistence of Returns

• The Access Problem

Section 6: The Action Plan – Constructing the Fortress Portfolio

6.1 Strategic Asset Allocation: Sizing the "Escape Hatch"

• Determining the Percentage: Why 10-20% is the New Baseline

• Liquidity Budgeting: Stress-Testing for the Recession

• The "Barbell" Approach: Maximum Efficiency

6.2 Vintage Year Diversification: Timing the Market

• The Danger of Market Timing

• Building a Ladder

• Recession Vintages

6.3 Tax Implications and Administrative Complexity

• The K-1 Reality

• UBTI (Unrelated Business Taxable Income)

• Tax Efficiency

6.4 Conclusion: The New Mental Model for Wealth

• Abandoning the "Ticker Tape"

• Defining True Risk

• The Final Thesis

Baked with love,

Anna Eisenberg ❤️