Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance,

examining events occurring in markets right now and financial history to see what lessons can be taken away,

including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

A friend of mine sent me a link last week to a CNBC interview with the giant motivational speaker,

Tony Robbins, where he extolled the virtues of investing in private equity.

Robbins argued that private equity provided high returns with low risk to rich investors,

and that these great returns would soon become available to ordinary investors, and surprisingly, with no fees.

In fact, I was confused as he seemed to saying, that you would receive fees as an investor.

All of these rich idiots are paying fees, but somehow regular people won't have to.

I haven't watched the NBC in quite some time, but the whole thing came off as being like a commercial.

For decades, you know, private institutions, big institutions, pension funds, ultra-wealthy people have had access.

But the general public has not had access and most of them don't even understand the impact.

For example, in the S&P 500 for the last 35 years, we know we've compounded at 9.2%.

It's pretty darn good. You're doubling your money about every eight years.

But you've got 14.2%, not with these guys with average private equity

So imagine getting 50% more per year compounded for decades. So you don't have to fight to get into these funds anymore

You can actually purchase the fund the companies companies themselves. You can become a general

partners. You know, you're a limited partner when you're an investor in one of these funds, but you like the CEO, the CFO, and they make 2% whether they make you money or not, and they make 20% of the upside, and people give that because of the amazing returns. Well, now you get the 2twenty. It's pretty extraordinary. So I own 65 different

firms, some of the biggest in the world now that I'm a partner in in that area. And anyone can

start to do this. Now, I know very little about Tony Robbins, but as you can probably guess,

I was instantly skeptical. These claims fly in the face of all financial theory. To start with, it's not obvious why investing in private companies would provide much higher returns than investing in publicly listed companies.

Private companies are still just businesses and subject to the business cycle, like all investments.

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