Anybody who reads the Wall Street Journal lately will have noticed something unusual: seemingly every other day, the business-related newspaper will feature a special advertising section or large advertisement telling readers to “Think it New”—the slogan for Apollo Global Management’s ‘alternative investment’ expertise. They are told that ‘perspective is power,’ and that the Wall Street Journal audience needs to think past the boring, stuffy stocks and bonds and put their money in the ‘convergence of public and private markets,’ aka ‘the future of finance’.
Apollo Global Management is a giant packager of investment products, alongside Blackstone, KKR & Co., Morgan Stanley and Blackrock—all companies that have been aggressively promoting ‘alternatives’ to a new audience of retail investors who are not hedge funds, giant college endowments or the kind of people who like to compare whose super-yacht is larger than whose. The ‘alts’ they’re pushing might be private equity or private credit, real estate or infrastructure; what they have in common is very high management fees, greater risk and a lack of liquidity—roughly translated as: if you don’t like how the investment is performing, you can’t get out of it.
The massive marketing push has been remarkably effective. In the case of alts, a full quarter of retail investors now own at least one private equity investment, and overall some $15 trillion of private market assets are under the management of these giant marketing machines. And those investors are reaping enormous profits, right? Actually… for 2024, the aggregate alts return was 7.08%, compared with a 25% total return for the S&P 500 index. The stodgy stock index also outperformed private funds on a 3-, 5- and 10-year basis.
This might be related to the fact that fees for private market funds have been reported to be three times higher than those for public investments. The average expense ratio for semi-liquid funds is 3.16% a year, while it’s not hard to find index ETFs that cost .25% or less. By that measure, an alts investor is paying 13 times as much to achieve this level of long-term underperformance. Retail investors get whatever is left over—whatever the big guys aren’t interested in or reject on the merits. Boring is not beautiful, but at least it’s not overpriced and illiquid.
MIXED SIGNALS
If you’re reading tea leaves about the future of the U.S. economy, and whether the U.S. Fed will raise or lower interest rates, the most readable fronds are the monthly unemployment rate statistics. In the case of the newly-released December numbers, the U.S. economy added just 50,000 jobs in the last month of the year. But at the same time, the Bureau calculated the unemployment rate to be 4.4%, down from 4.5% in November.
Last year’s job growth was the weakest since 2003, with just 584,000 jobs added. To put that in perspective, an estimated 3.9 million Americans reached age 18 in 2025. Economists point to immigration policy slowing the supply of new workers and the impact of higher tariffs leaving employers reluctant to expand. The result has been dubbed a ‘low fire, low hire’ staffing dynamic.
Additionally, the labor participation rate—the percentage of Americans actually looking for jobs—never fully recovered from the Covid pandemic. Just over 62% of Americans seem to want jobs, down from more than 66% in 2006. If hiring remains stalled and wages are stuck in the mud, that could eventually lead to fewer retail sales—the main driver of economic growth.
ONCE A DEADBEAT…
After the coup removing Venezuela’s president, is the new leadership going to start paying their bills? Eight years ago, Venezuela defaulted on $59 billion worth of government bond obligations. Venezuelan government notes due in 2027 jumped 29% in value on the open markets right after the seizure of Nicolas Maduro.
The Venezuelan government and state-owned oil company Petroleos de Venezuela owe $43 billion in past due interest payments on top of the face value of the bonds. The country has value in its 303 billion barrels of oil reserves, but its derricks produce only about 1% of the world’s oil output. Venezuela’s total gross domestic product totals around $42.6 billion—meaning a year’s worth of the entire economy’s production equals what the country owes its creditors in back pay.
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