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This is a personal finance show on money, how it works, how to invest it, and how to live without

worrying about it. I'm your host, David Stein, and today is episode 509. It's titled, Should You Invest in Private Credit?

A week or so ago, I was on a Zoom call with a number of financial advisors, and a number of them mentioned they had personally invested in private credit, or they were putting their clients in private

credit. Now, what is private credit? Sometimes it's called direct lending, and we've talked about

it in the past, but we've not done a dedicated episode on it. So I'll certainly describe what

it is, its characteristics, how to invest in it.

But first, one of the trends that has been going on for a number of decades now that we

have mentioned on the podcast is the number of publicly traded companies that have

public stock that we can purchase on an exchange. That's dropping. Back in

1996, there were about 8,000 firms that made up the U.S. stock market. Now there's less than

4,000, even though the overall economy in the U.S. is bigger. There are fewer publicly traded

firms. Now, partly that's been a shift in

the economy as it's become more service-oriented, service-based. That generally leads to smaller

companies, fewer manufacturing firms, but there's also been more taking public companies private. And startups that are private that grow to a size

where they typically would have gone public, they haven't. They remain private. And so there are just

more private firms, fewer publicly traded firms. Now, for most of the past few decades, the opposite trend was in the debt

world. Historically, companies took out loans from banks, and then over the past few decades,

we've seen banks syndicate those loans. This is called the leverage loan market. Sometimes it's

...