Alan Waxman

Are you in this bucket?

Are you in that bucket?

And then he said, we need 20% returns.

I was like, okay, how much leverage are you taking to get 20% return?

It didn't matter.

No one thinks about unit returns.

They only think about nominal returns.

And that's why we've always talked about from beginning.

And I think many LPs have gotten a lot smarter on return units and risk units.

But nominal returns, they're just underlying risk because there's so much leverage out there.

People can make returns whatever they want through leverage, but it's not capturing units of risk.

And at some point, the AI is going to figure out how to quantify units of risk for private capital.

That'll happen someday.

That has not happened.

People still think about nominal returns versus just the skill of investing.

Human beings get into behavioral patterns.

They look at the past and they just keep going.

Direct learning has oscillated between a really great time to invest and a less good time to invest.

And it's all driven by capital flows.

Somewhat recently, you see a whole bunch of new money coming into, let's say, direct lending.