Introduction

In 1929 Jesse Livermore, son of a poor farmer in Massachusetts ran away to Boston to join the ranks of a stock brokerage office. As time went on he moved from writing stock prices on a chalk board to making small bucket trades.

Livermore got so good at this that most of the bucket shops he frequented banned him outright. Livermore’s success at “trading” built him a reputation as a young prodigy, someone who had a natural ability to feel the flow of prices and read the tape like no one before him could.

By the time he was in his late 20s he had already made and lost a fortune and by his late 30s, early 40s he was one of the most famous traders on Wall Street. This relationship to the street allowed him access to massive amounts of capital by which to trade.

His most famous trade would come in 1929 when he bet the house that the stock market would crash and was proven correct. All told Livermore earned profits in excess of $100M which inflation adjusted would be roughly $2B in 2026 dollars.

This trade would cement his legacy and allow him to live large post the 1929 Crash. The issue for Livermore is he did not know when the fold em’. Livermore would take massive bets in the market throughout the 1930s suffering heavy losses that would bankrupt him by the late 1930s.

In 1940 having lost his fortune compounded with serious personal issues he ended his own life in a New York City hotel.

I tell this story mostly because we all like a good story about the stock market but the practical reason is, just as Livermore believed he was gifted and “different” from the general public in his stock market capabilities, how would Private Credit and Private Equity investors not feel the same way?

Private Credit has been a massive success by any standard and participants in the funds have made massive fortunes. Private Credit is the fastest growing segment of the asset management industry growing by 20% CAGR from 2017 to 2022 and since the 2007 housing bubble burst it has grown ten-fold.

In terms of the number of funds 2011 saw just 100 before 2023 when there were 1,080. The growth has been impressive, but the market is forecasting better days ahead. It is estimated private credit will grow to $3.5T by 2028 which would make it larger than the US leveraged, and high yield debt markets combined.

While we will dive further into the PC market below, my question to you, the intelligent practical investor is what has allowed such breakneck growth in PC? It is our belief in house that assets that do well do so because the economic environment allows for it. What has advantaged the PC market in the last 46 years since the inception in 1980? How are those dynamics liable to change?

We explore this, and many other credit related topics in the piece to follow, enjoy and we truly hope this piece is engaging and adds value to you, our readers.

Private Credit