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Matt Levine, Columnist

People Are Worried About Private Market Liquidity

Also SREIT, crypto treasury companies, tariff trades, FCPA and Nikola.

This is a newsletter about funding models now. We talked yesterday about banks, and how their funding model — raising money from depositors who might want their money back at any time — influences what sorts of assets they should buy. But the same questions — how should I fund the assets I own, and what assets should I own given my funding model? — arise everywhere. Here is a simple story of private markets:

So that’s the basic idea. Ordinary retail investors, and products that cater to them — like mutual funds — care about liquidity, so they invest in public stuff. Endowments and insurers and pension funds and other institutions with long time horizons don’t care about liquidity, so they can get higher returns by investing in private stuff.