E267: Why 95% of LPs Misread Private Market Returns

In this episode of How I Invest, David Weisburd interviews a finance professor about alternative investments, particularly private markets. The discussion covers the lack of academic research in private markets due to data scarcity, the difficulty in assessing private investment performance compared to public markets, and the use of the Kaplan-Shore PME index for risk-adjusted returns. The conversation further explores insights from a recent study using the Burgess MSCI dataset, highlighting the historical outperformance of equity buyout funds, the higher beta of venture capital, and the impact of fund size on returns. They also delve into the persistence of returns in venture capital versus buyouts, the role of incentives in manager performance, and the potential implications of recent public market trends, particularly the performance of MAG7 stocks, on private equity investments.