The private equity bubble is about to deflate

MARKETS today pose a new existential question: Can there be a bubble in something if it has no price?

As a believer in efficient-ish markets, I am uncomfortable calling anything a bubble. Recognising a bubble requires spotting an asset or asset class that is objectively overvalued before everyone else does. Making this determination is almost always impossible in real time, even if it’s screamingly obvious in hindsight. And that’s in public markets, where prices are easily observed and constantly updated as investors form views and incorporate information.

Sometimes, however, you get an inkling that something isn’t right – and lately I am feeling that about private markets, especially private equity, even if there are no prices that can collapse or be inflated.