Even more strangely, by the way — the secondary firm, the firm that bought that stake at $50, can immediately mark it up at $100 on their balance sheet. And so if you are an investor in these secondary private equity funds, as the fund deploys, you get immediate markups.

DR: I think endowed institutions are the worst offenders. And so the sort of foundation–university complex... it turns out that all the people who work at these places think exactly the same way. They have a shocking degree of homogeneity in their perspectives on the world. So it’s no surprise that they’ve all herded into the same assets and the sa... See more

I think the next element of it was this faith in Yale and Harvard — right? The best institutions, “the smartest people in the room.” This is what they're doing — right? “Let’s copy this. Copy the experts.” The sort of Obama-era faith in technocracy. These forces all picked up and, I think, gave rise to this private asset bubble.

But when the money stops coming in — which, by the way, it stopped two years ago — so the fundraising has been down for three years in a row. As that fundraising dries up, the ability to exit those deals to a sponsor that's bigger than you goes down. The exits dry up even more. And as the exits dry up, the returns look worse, and the fundraising ge... See more

Because if they're not getting money back, it probably means that what they're valuing the assets at is not a market price. Otherwise, they'd be clearing those transactions.