Meet with PWL Capital: https://pages.pwlcapital.com/en-ca/contact-us?utm_source=content&utm_medium=youtube&utm_campaign=rationalreminder_yt Avoid Online Scams https://pwlcapital.com/stay-safe-online/ Ben Felix or any PWL employee will never reach out to you on social media platforms or WhatsApp to give financial advice. These are scammers trying to commit fraud. In this episode, we are joined by Jeff Hooke, former investment banking, private equity, and private debt executive turned academic critic of alternative investments, for a rigorous and provocative examination of private equity, private credit, and institutional investing. Jeff draws on decades of experience in finance and years of academic research to challenge many of the assumptions driving institutional and retail allocations to private markets. We discuss why pension plans and endowments continue pouring capital into alternatives despite evidence of underperformance, how private market valuations can obscure true risk, and why the fee structures embedded in private funds create enormous hurdles for investors. Jeff explains the methodological challenges of benchmarking private investments, the role of investment consultants and industry incentives, and why illiquidity and opaque reporting make private assets especially difficult for retail investors to evaluate. Along the way, we explore survivorship bias, public market equivalents, unrealized valuations, and the growing push to bring private assets into retirement portfolios. This conversation is an in-depth look at the incentives, risks, and realities shaping the modern alternatives industry. Timestamps: 0:00:00 Intro 0:05:14 Why institutions and, more recently, retail investors, have been so willing to allocate to alternative investments 0:08:59 Why institutional investment committees seem particularly susceptible to the alternative investments story 0:11:53 How Jeff approaches communicating the downsides of alternatives to investment committees 0:15:10 The role investment consultants play in promoting private assets 0:18:30 How much public pension plans have lost due to their alternative investment allocations 0:22:05 Why it has been hard for institutions to replicate David Swenson’s success at Yale 0:29:35 How alternatives are going to work out for retail 0:32:27 Why it is hard to answer the seemingly simple question of whether private equity has outperformed public equity 0:38:38 The performance measures that are best for measuring private fund performance 0:42:41 The effect survivorship bias has on private market performance data 0:46:30 How private credit has performed relative to risk-matched publicly traded securities 0:52:19 Jeff's thoughts on Cliffwater's response stating that the analysis in his paper was wrong 0:54:25 Howe well investors understand the relatively poor performance of private equity and credit 0:58:53 The effect that non-market-tested valuations of unsold investments have on reported private investment returns 1:04:33 The effect that private equity has on the operational performance of their portfolio companies 1:06:42 How the risk of private investments compares to that of public market investments 1:12:10 Describing the range of fees in private markets 1:17:29 The effects that expanded access to private markets will have on retail investors 1:23:09 Jeff defines success in his life 1:24:33 Disclaimer Links From Today’s Episode: Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/