Larry McDonald

And they promised these financial advisors and their clients quarterly liquidity on an asset that is disgustingly illiquid.

Because imagine a private credit portfolio.

This is like a basket of like...

150, 200 companies that are all around the United States.

They're not publicly traded.

Their financials are okay.

Who knows?

Mystery meat.

And when I sat down with Charlie Munger, he said,

You know, just that the hubris that you see coming into markets and bull markets that can really get out of hand.

So the bottom line with private credit is this quarterly liquidity is creating these gates.

All that means for people watching us right now is because they promised this group of people quarterly liquidity, the gates are typically 5%.

And what we've seen across like seven different markets

uh private credit players the demand for the uh liquidity is like 10 15 so you so people want 15 of the people want the money back but they're only giving five percent per quarter and that's where it creates more of a run and that's because people see that and then say hey wait wait let me get first in line right

Yeah, exactly.

And then that spills over to high yield.

And credit, like the Greek, legendary Greek word for credit, krete, is about trusts.

And what's amazing about Lehman and the financial crisis in my first book is that the trust, when it breaks, it waterfalls because there's just like a massive run on the bank.

In this case, there's a run on all those business development companies that

And the KKRs, the private credit and the private equity companies that went all in on this space.