Blackstone’s Investors Want Their Money Back!
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- Опубліковано 4 гру 2022
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Stephen Schwarzman and Jonathan Gray of Blackstone have built the best fundraising machine on Wall Street, but now, the billionaire pair are in an unfamiliar position - having to return cash to clients who are asking for their money back.
Blackstone’s stock price fell last week after it limited withdrawals from its $125bn real estate investment fund BREIT, after a surge of redemption requests.
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6:30 Is that "each individual may withdraw up to 2% of his funds", or "2% of the total fund may be withdrawn across all investors, and if the quota's gone then you're too slow and it sucks to be you"?
Does the daily upside know about this?
I follow the advice - uptime, morningbrew and Blinkist😂
Would love a video about Blackrock ESG investment practices!
Love your videos! It would be awesome if you share the links mentioned from studies or articles etc. in the description!
If you're wondering why his usual sarcasm is more subtle than usual: this is the type of firm that would definitely sue him.
Honestly wouldn't be surprised you'd be sued just for mispronouncing it.
You can be sued for sarcasm?
@@klb097 At least in the United States, you can be sued for almost anything. Now, whether the suit will go anywhere is a different question, but the suit can be filed. I assume other countries have more sane rules, but still, you can be sued for a lot of things that have little or no merit. If you couldn't, it would be essentially impossible to defend yourself against a law suit, since a successful defense shows that the suit had, well, little or no actual merit.
@@klb097 they have lawyers they pay salaries to. They will sue you in their jurisdiction which often times is in NY or Delaware, Cali, somewhere far from you. Now you either need to travel there or hire a lawyer to represent you there, neither of which can be done for multiple years by any normal person.
They'll essentially run you broke using the legal system just to prove a point.
Sarcasm isn't protected in the US. Noted.
Hold up. So I can take peoples' money, tell them I invested it, asses that the investment value went up CHARGE THEM A FEE, and then prevent them from withdrawing the money! This is amazing!
Just wait till Michael Burry hears about this.
And people wonded why bankers and the politicians in their pocket aren't liked.
Apparently yes
You can't. Blackstone can
Yes, if you tell them up front that this is exactly what they will do in this kind of situation. (The policy, which all the rich investors knew right from the start, is that withdrawals can and will be limited during periods of volatility, because otherwise the fund would be forced to sell assets at the worst possible time, thereby significantly damaging the fund and all of its investors.) All those rich investors knew exactly what they were getting into, and now they want to change the rules after the fact. That's what rich investors do, that none of us in the real world can.
Patrick Boyle is a master. Each of his videos are pure gold…
I love his sarcasm
Its gold jerry , its gold
The absolute king of dry humor.
@@awolffromamongus875 He has me laughing out lout every video - thats pretty amazing for economics video's
...and humorous. this isn't humorous.
I hope someone at APRA in Australia sees this. We are rapidly putting an entire nation's pension savings into off-market securities. Magically, they outperform.
Those funds are doomed. Closing time.
🤣🤣
Outperforming and minimal disclosure, what could go wtong?
How you would feel being an investor in a fund that allowed redemptions at inflated prices? Industry super, pension payments or rollovers from their funds that have magically produced positive returns over the last 12 months!
until reallity hits :D
Patrick has mastered finance and Dry humour. I look forward to his videos each week.
So dry, he should sell Patrick Boyle dehydrators. The infomercials would be pure gold.
There's a few professionals out there who are not comedians, yet honestly have me in stitches. Patrick Boyle is definitely one of them. The dude is as solid as many geological features.
Mastered finance? What you smoking
dropped dead laughing at the thought of driving to every property in the portfolio
Yes, so "exhausting" but why not take the lazy shortcut
It's a bit silly to be sure. But the fact is, Google literally has driven to every one of them for you already. It's like a cheat code
If you dropped dead, who wrote the comment?🤔
I'm glad you revived! 😃 I just got a kick out of your comment.
@@philbert006 but not in real time. many street views are as old as from 2008
Having stumbled upon this it reminds me of the mortgage crisis when a police officer making $60,000 a year was given a loan with no money down for a 2.5 million dollar home and his mortgage was rated A. Must have been a magical mortgage. Comparable real estate dropping 27-32 % but theirs is up 9% . They must be investing in magical real-estate. I wonder if those in charge have a way to get out before the rush to the bottom.
Hmm?
there's no rush to the bottom.nobody gets out, or they get out one at a time and slowly, even if they wanted to get out faster. It's on them because that's what they signed up for (referring to investors)
Wouldn't posting increasing valuation also increase the fees they charge?
Limiting withdrawals, literally refusing to sell assets in order to refund investors , prevents the valuation to actually take place: you can't price what is not for sale.
These guys are in charge of setting their own bonuses, and will blame global market conditions for losses.
@@nicolaschalifour Surely not, these are reputable people and that doesn't sound like a conflict of interests at all.
... or you could be spot on.
@@nicolaschalifour Exactly. It’s non liquidity shell game.
As someone who recently went into real estate investing, this has been my worst year so far. I lost a lot, including other peoples money. Never going into it again!
You shouldn't be quick to conclude. Different markets have their lows every now and then and that's why the most important thing in investing is "diversification". You must never put all your eggs in one basket.
Personally, as one who has also been into Real Estates for a very long time, I made my first million earlier this year from stocks alone (used the services of an expert though). I also experiment with a couple of other things. Imagine what the situation would had been given the present housing market if I were solely banking on it. Goodluck!
@@nielgibson5605 ...Very sound and realistic. I too have been into this for sometime now and though I won't say I have lost a fortune, I have squandered quite a lot... You mentioned using
pros, if its not a problem. do you mind telling who or recommending a good one? I could definitely use the help of one right now... I look forward to you
replying...
relax. you may be luckier next time
@@timsherwood7564 Funny enough, I can honestly relate. I don't know if I am permitted to go into details on who I worked with but you could look up "Stephen Joseph Kohlhofer". I'm not so sure he takes on new people right now, but you could try.
@@nielgibson5605 Thank you...
The illiquid investment strategy is basically what I use. I own shares of an index fund I could sell at every moment, but I chose to only check every few months. Otherwise I would go crazy at every big drop
@@thewhitefalcon8539 but the data shows that most investors do the opposite
I do the same except that when there is a big drop, if I have some extra cash on hand, I'll increase my contributions for a couple of months.
@@williamchamberlain2263 but the data shows the average investor.. and the average investor is as intelligent as the average human being...which is below 50iq in 2022.
But there's a difference between limiting your own information and having someone limit your information for you. At least you know that when you check the information you're getting is accurate.
@@awfm0 the average person will always be 100iq
remember when the older generations were *insisting* to the millennials and Gen Z'ers that housing was absolutely, definitely *not* in a bubble?
What's also concerning is the high exposure that pension funds have to private equity. The average teacher and firefighter has no clue that their future pension payments are becoming increasingly reliant on these "less volatile" and "uncorrelated" assets.
It’s worse then that
Go check wealthons channel. They had a guest on who does evals on them for private investors.
All but few states have insolvent pensions.
Only places like Wyoming or New Hampshire are solvent.
Good thing I don't have a Pension!!
😜😜
back when some northern Norwegian "village" had their funds in NY wrapped up in junk mortgages I was scratching my head.........for awhile. man, I bet that hurt. for me, it just didn't make sense.
I am taking the CFA L1 in February and I was up late last night studying the ‘Alternative Investments’ reading. This is a 1:1 real world application of everything I learned. It’s so helpful to learn real world applications on these topics. I bought all 3 of your books and will be reading 2/3 next month to drill down on these concepts. Thank you for your free course in finance. It’s a true pleasure to watch every single video.
Where ever you invest in remember they have a large share in that company
Good luck on the exam!
I’m doing level 1 too, lots to learn and really interesting!
Always look forward to Patrick's new episodes. This one didn't disappoint. The "Fargo" clip in reference to ARKK was priceless!
"Is that your buddy in the woodchipper"?
Yeah.. cracked me up completely😀😀
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Damn my dude got a shitload of patreons lol
Patrick Boyle. Top commentary with a hint of humor for investments. Also the only guy that reads a teleprompter with his nose and not with his eyes.
So funny! He does, doesn't he?
Hehehe
bruh wht a comment
I swear I've read this exact same comment on a previous video
🤣Poor Patrick LOL
If I had to read teleprompters, I'd probably read them with my nose too. But that is because I am of an age where I have to use so called progressive lenses which never seem to have the right calibration in the spot on the lens where it needs to be.
They do have progressive contact lenses. Perhaps he is wearing one. I tried them once and gave them up during the trial period. Every time I blinked, they shifted until they settled again. I found it too tiring to bother with.
the Fargo woodchipper reference (about ARK fund) was so freaking hilarious
Patrick, this is one of your best snarky sarcastic expositions so far! LOVED it!
Took me 5 minutes to realise it's about blackstone and not BlackRock I was so confused
Haha. I didn’t even notice until I read this comment. Stone solid doesn’t even make sense. They should have said hard as stone. A stone statue, etc
Blackstone started blackrock
Blackstone > Blackrock
Blackrock was under Blackstone and it was called "Blackstone financial management" but due to management infighting, they separated. Blackrock is bigger but Blackstone is more profitable.
Perhaps it’s Patrick’s humor: the firm’s spokesman said they were “rock solid” therefore Blackrock?
in love with the “now yous cant leave”
The scene for the Ark innovation fund was priceless; as is your video. Thank you.
A fraudulent reason for them to intentionally overestimate their value is that they would get more fees as the fees are usually a % of the value of the fund.
@cheeky43 Sorry I only make investments which lose money.
i used to live in a college apartment owned by American campus communities. They got bought out by Blackstone this year for $13 billion. I’d assume their cash reserves are somewhat strained at the moment and can’t handle redemptions. As for the apartment company, they own practically half the “luxury” student apartments in the city and have a decent number of affordable options like the one I lived at. I wouldn’t be too concerned about their future.
urgh, you brought back a bad memory. They bought our off campus housing in my last semester. When their guy came in to take photos he walked in on me nude just stepping out of the shower, so I refused to be helpful -- we're supposed to get 24hrs notice for entry -- I stuck myself in every one of his pictures looking like a dripping wet cat from hell with mega stank glare and double f-u fingers. Hope someone at blackstone had to see them, because our rents raised by a great deal after they acquired us.
So funny @ 2:16 ....When Patrick said .. a cynical view... which of course I would never take....I almost fell out off bed 😂😂😂
Wait. You mean to tell me that I can buy bags of rocks WITHOUT paying these high management fees? Why I’ve been bamboozled by these slick Wall Street firms!
We could barter rocks. I'll club a squirell and deliver it for 12 rocks.
And a bag of rocks will hold its value.
@@eoghancallaghy2634 Yeah go ahead and tell the flint knappers that. The value of recently knapped flint knives just isn't the same as the price in the good old stone age days. It wouldn't surprise me if even the really old ones in the museums lose value every time there is a new dig and more get found. sigh. 😥
I wouldn't be surprised if the investors are looking to cash out in order to pay off margin calls on their other investments. I suspect a lot of this is going on.
Bingo! There's an article in the financial times discussing why investors are pulling out and its for this exact reason. Most redemption requests coming out of Asia. Highly leveraged investors asking for a return of capital to pay off margin calls
Don't be the last one to panic
@@djackman9746 what’s the article?
That’s exactly what Steve S has been saying. It actually makes sense. I’m a PE investor and have seen this a ton!
I discuss some of my analysis here:
ua-cam.com/video/HKTnf1Zwvt8/v-deo.html
Blackstone defaulted on another loan and is blocking funds from it's two biggest REIT. No reasons to worry LOL. Who wants to lend to Blackstone now ? I just did a video that goes into the details of this hidden collapse.
As an accountant in property, I won't comment in detail. But keep up the good work. Deadpan really works.
I wish you would comment in detail
Time to sign up for Morning Brew to keep supporting Patrick. Great to see the channel doing well.
Hi from Australia! Only recently found you whilst checking out the FTX saga stories. You have a unique presentation of financials and are a joy to watch and listen to. I'm working through your library of works. Great to find you!
Hello fellow aussie
Australians and Irish share a special bond. The bond between the two carbon atoms in an ethanol molecule.
Also there are a lot of Irish people here in Sydney's eastern/southern suburbs for some reason...
Anyone notice that as soon as stock markets became available to everyone, private equity markets exploded in size?
I mean that was bound to happen just by the nature of business.
If anyone can buy into the regular market and make market returns, then how do investment professionals charge investors money? They need to outperform the market, thus they went out and found another source that “can” outpace the market.
The system, my dear Watson.
Everyone enjoys a good gamble (well those who are capable of feeling pleasure, at least)
@@Maximocow easy to outpace the market when you have market power and can bid up the market when times are good for paper gains and then assess your values yourself to boot!
Havent stock markets always been open to eveyone?
Using real estate for private investment needs to be severely limited. There’s absolutely no way this could end up going well
Lmao are you new to America or something? Rent controls and public housing is communism brother. get with the program
@@jp__878 communism or three corporations owning all the multi unit housing are both equally terrible prospects
what, something so vulnerable to downturns *shouldn't* be such a bedrock of investment? you don't say lol
In my much-less sophisticated grasp of the market it seem like capitalism is based on free, fair, and transparent markets, and many failures arise out of an abundance of free trade while abandoning the other two principles.
Anyway, thank you for another excellent explanation of a complex topic. The use of alegories, often humorous, is very helpful and much appreciated.
Love everything you do Patrick thanks for giving us retail investors hope
There is no hope you fool.
@@Newtube_Channel be positive pal i know their's alot of bull out their ,they got us by the balls but us poor people will make it ,we always have
Also the dry jabs at crypto bros are a plus
@@lildic0146 T'fk are you talking about? If you are poor then you should be staying away from any form of market or investment. Are you waiting for some phantom saviour to save your sorry ass into prosperity??
@@Newtube_Channel @New Tube Channel Jesus christ aren't you a joy to be around? yes stay positive pal sorry if that offended you? How miserable are you? Whatever it is, it's gonna get better pal
Thanks for the update Patrick. I saw that Starwood REIT (second biggest private REIT in the US) has also reached their redemption gate.
In addition Blackstone's Private Credit Fund has as well.
People knew upfront what they were getting into. Open-ended real estate funds didn't fair very well in 2008. Not sure why people thought this time would be different.
Patrick pre-heated his grill before clicking 'record' 😂
Patrick Boyle is the Rod Serling of the financial game
Such a great channel. I've been watching for a while and it's refreshing to see well-researched and concise videos that aren't filled with fluff just to reach the 10-minute mark. Thanks.
Just found him he’s excellent
I love your shows.I am fascinated that our lives,economy and worth are in the hands of such financial institutions and the obscure accounting practices and financial instruments used to manage wealth.
Literally the funniest fintuber. Great stuff Mr B.
this hasn't started but it's already gold
Wut
Gold member
Patrick you and your channel are utter gold. I saw your channel and a thumbnail from one of the greatest movie characters of all time and I clicked immediately and taught that like button to fear me! Vinny
I literally just watched A Bronx Tale for the first time. What a great movie.
Your work is informative, entertaining and consistent. Thank you Patrick!
Amazing commentary on the psychology of investing. Absolutely love the peek-a-boo analogy 😂
Think they ended up in hospital in the ICU....
Broke: "Oh no, think of the ramifications! Billions wiped! Recession incoming!!!!1!"
Woke: "This will make for a banger Patrick Boyle video"
Bespoke: let's suspend redemption so that Patrick will make a new video.
No. Those billions just made has mother fuckers who at any given time (besides perhaps are 401K and a IRA and casino stonck day trading account) really don't own any stocks at all.
I mean even right now, I have IRA and 401K and several margin accounts and stock brokerage accounts... NONE of it is in stoncks right now. In CD's and some in cash earning smaller sweeps for dabbling whenever stupidity carnival clowns come out to play in various names in the stonck market.
But mostly nobody really owns stoncks other than the top 10% and that's tiny portions.
Stoncks aren't the economy, they're a gambling financing stupidity method for wanna-be monopolists to get sweet money they never have to repay from rich fucks and scamming retirement accounts particularly 401K holders out of their retirement money.
@@jmitterii2 My brother in Christ, we're all familiar with that from the SFC models you learn in any decent finance/banking course. Just chill and enjoy the fun and jokes
5:55 "I'm sure they're right, because why would they mislead us?" Never laughed so hard!
Patrick didn't mention that (according to the Financial Times) about 70 percent of redemption requests have come from Asia. Considering non-US investors account for only about 20 percent of BREIT’s total assets, that's a pretty big story he glossed over.
It is funny how Patrick tailoring his videos to be entertaining but not accurate and make people sign up and patrick making money on UA-cam! Hilarious.
The vibe of this episode and how it ties into the subject... patrick is becoming a great director.
"Now, a cynical view, which of course I would never take..." I love this guy.
Imagine marble and granite countertops as an emoji representing a rock solid 10% annual ROE.
I am reminded of the Prudential's RE private equity LPs from the early '80s. By 1987 they had acquired the distinct aroma of old fish in the back of the refridgerator.
We reached out BlackStone for comment, and Sam B F called us back and said " Everything is fine bc I was paying attention "
Well said, so similar to what my Accounting Professor said regarding financial asset management. Artificially smoothing of earnings and profit growth by accounting and management decisions has been discussed in academia for long.
Cynicism is a lost art, Patrick is THE maestro !
420k subscribers, noice 😁 thank you for all the videos you've put out to keep us informed!
I had to check, apparently the ppi for cut stone is up just over 15% since last year.
Just found your channel... love the delivery.
I'm still chuckling from that whole rocksolid diatribe. Please never change Patrick.
This Channel is a gem, i was just searching for company histories and now im staying for the comedy :) i want those rocks.
Thanks for another fascinating video! The idea of an "illiquidity premium" sounds crazy (and from your video it seems the name was proposed as a joke), but it looks like there may be something to it. It kind of makes sense as a way for the fund managers to buy themselves time to make a long term profit without having to deal with panicked investors. But it goes against the principle that more information and greater accuracy in pricing is always better. By allowing inaccuracy (or even borderline fraud) in their reports, the investors are giving the fund managers much more leeway than a public fund will get. That means the managers have a greater opportunity to screw up. I don't think I'd put my money in a fund that works that way.
A bank CD is a perfect example of an illiquidity premium. You can't withdraw it early without paying a penalty as stipulated in the agreement. In exchange, you get paid a higher interest rate than a simple savings account.
Hotel Black Rock: You can check out any time you like
But you can never leave
great pop culture reference
Very educational video and as always an outstanding presentation. Thanks!
I'm here for the rap - I heard this was a rap channel
Best rap channel ever!!!1!1
Thank you twice! Plainly said: right on the point! Please keep going man, you make the world a better place!
you have great explanations of what's going on.
You have quite the talent for sarcasm. It is much appreciated.
nice. first time watching you. You manage to take what should've been dry and boring and turn it into colorful and even hilarious. good job! 😃
"Now Yous Ain't Leaving!" 😂
Calm and hilarious while giving quality information for life time use. Great job @patrickBoyle
Gz on 420k subs bro 🚀🌕
Cathie Wood’s Ark Innovation Fund with the scene from Fargo. This is simply the finest. My god, I’m still laughing.
Right to the point and honest truth.
Thanks
Pat, we like your mind-set and thought process. You are good, very good.
Of course people want to redeem. As you suggested they get a free put to Blackstone at inflated prices.
I bought the $81 puts before thanksgiving for $1.01. I sold them last week for A LOT more than that last weeek. I think it was $4.84. Maybe a little bit less. Great trade.
Was that last week?
Thanks Patrick! Another Superb Economic Satire!! ⭐️⭐️⭐️⭐️⭐️
Your sense of humor is sharp and witty. Love it.
What can I say other than ❤
Patrick your an incredible showman 😅
So full of insight 👌🏻
The classic 'last money in, first money out' mantra is there for a reason.
Patrick, thanks. It's quite a difficult subject...to process, both the subject and the subject matter 🙏 😊
Keeping up with you... thank you.
This man cracks so many jokes and I haven’t seen him smile once. I like the cut of his jib
This was a good one man, gonna have to watch it again cause I'm sure I missed something 😆
Enjoying content and Videos, Thank You !
I fkn luv this channel! Super insightful, thanks again for another great episode.
Hello from New Zealand 🇳🇿. Fantastic content and the best use of sarcasm I’ve heard in years. How I wish you were my professor at University. You are inspiring.
how far are we from banks and hedge funds burning to ground - the recent events hint that the system (and not just cc) need better regs and auditing and stress tests
Is there an analog to futures or forward contracts for real estate, or do these terms apply? Isn't illiquidity just another way of saying that the price spread is substantial? Could and should a REIT lock in profits by selling 'futures' in anticipation of investors wanting to cash out during and after a bull market? By locking in money into futures contracts, does this not help calming and even preventing a bull market?
The clip from Fargo for the performance of ARK was fantastic !
Howdy from Sacramento! Great content. Subbed...
just getting the popcorn ready...!😂😂😂
Same
That hint of comedy in excellent commentary is just gold. Bravo.
Great Video!
It’s amazing how you manage to be hilarious and extremely serious 100% if the time
Lol! I'm so glad Patrick's going to be my professor next semester
Wow! I fell for this same trick with First National Realty Partners out of New Jersey. Beware! Their sales pitch was that the targeted back end profits would be 18% and distributions would be around 8%. Distributions were actually never better than 4%, and a month before they sold one of my investments they excersized an option to purchase my share at about 5%. They made 50% on the sale according to their numbers.
Was that the fargo wood chipper? 😂
Goody goody gumdrops! Cannot wait for this :) - yippeee!
As far as I can tell ‘private equity’ is mostly a ‘hidden’ financial system that actually underwrites government spending from the creation of birth certificates and the borrowing of money into a trust account (security of the person) in our CAPITALIZED names. That money is invested (private equity) and then when you die the loan and interest are repaid and all your debt that you repaid but did not discharge is discharged from the account and then the rest is legally frozen for claims of lawful heirs but the government is allowed to collect the interest that accrues on the frozen amounts and that’s what funds the day to day spending, not actual banks ‘lending’ trillions of dollars. Our taxes are funneled into this system by way of paying the imaginary interest on the imaginary loans to international bankers but the real purpose is to limit our ability to be independent since virtually everyone is forced to enslave themselves to pay the government’s ransom. It is possible to take control of the trust account in your name while alive but it requires knowledge of old equity laws which is a hidden legal system that sits above the commercial legal system we normally deal with... a few folks are doing this but they are basically required to keep it private since you’re moving from the public realm to the private.
Brilliant, as always.