For the life of me, I can't really figure out what Tom Wolfe meant when he said that the Blackstone IPO represented the end of capitalism as we know it. I doubt that he even knew what he meant, but he's a writer, so he's allowed to just put stuff out there and let others interpret it. The re-emergence of Tom Wolfe is interesting in itself. For awhile there, he had to write about the sex lives of college freshmen. Seems like he's back in his element, which is good.
I will say that I'm floored by the amount of attention being paid to private equity these days, especially since it's not something that most retail investors have any connection to, unlike dot-com stocks during the bubble. I've voiced my skepticism about Blackstone, but the stock could benefit from the shortage of publicly-traded private equity options -- at least for awhile.
While I tend to agree with Paul Kedrosky that we overuse the word bubble, and that our narrative biases lead us into forcing current events into the mold of history, I also think that an understanding of history can be useful.
Meanwhile, Eric Falkenstein talks endgame:
I have seen a lot of private equity funds started by guys who's only experience is being part of a team that made a lot of money. It is very hard to know if these people have alpha, because for many, they were just in the right place at the right time (eg, just because he worked at Goldman doesn't mean he can make Goldmanesque returns).
I suspect that the end of this business cycle will be precipitated by a conspicuous failure of a private equity firm, which will then cause a reconsideration of all private equity funds, they won't be able to sell their crappy assets to each other and the game will up (like when the United deal fell apart in October 1989, signaling the end of the junk bond market).
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