Marc Rowan: evaluation

Transcript context

…Why is there so much adjustment in the quantity of liquidity and not more in the price? A 30X decrease is a massive adjustment in the Q or the quantity. Why don’t you just pay people to get more liquidity? That might be inefficient? A higher price? But isn’t that what’s happening? Isn’t that what LDI in the UK showed us? Is that there is liquidity. It’s just not at or near the market price. I do expect that in risk-off environments, we will actually see much greater price adjustment. I don’t want to go down the rabbit hole of liquidity, but I want to contrast this to what I see taking place in the world. This is my 40th year doing this, and we have an impression in the investment marketplace that private is risky and public is safe. Well, was that the case? Yes, that probably was. When I started in business, that probably was true. Most things that were private were private equity, venture capital, and hedge funds, and things that were public were generally public for the right reasons. Well, is it true today? Right now, I look at the S&P 500. I look at 10 stocks that are nearly 35 percent of the S&P. I look at those 10 stocks that trade north of a 50 P/E [price to earnings ratio], and I say to myself, “Is that actually safe? Or is that just a reflection of a liquidity bubble and everyone piling into passive management and everything else? ” I don’t have to conclude that, but my belief of where the world is today is: public is safe and risky, and we’ve seen that. Look at all the tech correction that took place in 2022. It’s very correlated, right?…

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