Good point. I would guess private equity firms can be a bit more nimble without shareholders and the quarterly earnings of Wall Street to worry about. Obviously less transparency to the public. I thought Jamie’s letter sounded a bit like he was running for office. We could use him these days …One paragraph that is interesting isJamie Dimon is preparing Chase Bank for whatever the future will hold; we are not running a bank but running our portfolios - what can we do to prepare for WHATEVER the future holds?
https://reports.jpmorganchase.com/inves ... etters.htm
From his letter:
Therefore, we are prepared for a very broad range of interest rates, from 2% to 8% or even more, with equally wide-ranging economic outcomes — from strong economic growth with moderate inflation (in this case, higher interest rates would result from higher demand for capital) to a recession with inflation; i.e., stagflation. Economically, the worst-case scenario would be stagflation, which would not only come with higher interest rates but also with higher credit losses, lower business volumes and more difficult markets. Under these many different scenarios, our company would continue to perform at least okay. Importantly, being prepared means we can continue to help our clients no matter what the future portends.
At age 63 retired with a 65/35 AA I am prepared by holding:
1) 50% in Vanguard Total Index ETF
2) 15% in Vanguard Intl ETF
3) 5% in Vanguard MM Fund
4) 5% in TSP G Fund
5) 25% in 5 year Treasury Ladder
Of course no one knows what the equity or the bond market future will hold; aligning my needs for cash with my bond maturities so I will be satisfied with whatever happens and I can sleep at night and stay the course.
As my dad used to say
“Prior planning prevents poor performance”
As my business school teacher used to say
“Minimize your maximum regret”
"In previous letters, I have described the diminishing role of public companies in the American financial system. From their peak in 1996 at 7,300, U.S. public companies now total 4,300 — the total should have grown dramatically, not shrunk. Meanwhile, the number of private U.S. companies backed by private equity firms — which does not include the rising number of companies owned by sovereign wealth funds and family offices — has grown from 1,900 to 11,200 over the last two decades. This trend is serious and may very well increase with more regulation and litigation coming. Along with a frank assessment of the regulation landscape, we really need to consider: Is this the outcome we want?"
I kept wondering on how this would impact broad market indexing approaches we take. What stays public, are those high quality ones? Or lots of missed ones due to the private equity taking them private?
Statistics: Posted by Parkinglotracer — Wed Apr 10, 2024 2:31 am — Replies 42 — Views 4145