Juggling Dynamite

Private equity returned fewer profits to investors for a fourth straight year as the industry sat on $3.8 trillion of unsold assets and struggled to raise money for new funds.

Distributions as a percentage of net asset value remained at 14% last year — the second-lowest level since the depths of the 2008 financial crisis, according to a new report from Bain & Co. And the duration of the rut is even more severe than what private equity firms faced then. Here is a direct video link.

Also see, Private Credit Fund Is Selling $477 Million of Assets at 94% Value as Industry Worries Continue.

From 2009 to 2022, alternative and private lenders multiplied as traditional banks tightened underwriting standards and yield-starved investors looked beyond conventional options. As usual, ‘easy money’ led to overconfident, under-analyzed allocation decisions across many asset classes at once.

Real estate busts tend to be slow-moving, and then suddenly, all at once. Eight years after the US commercial market peak, the price discovery in current sales is wiping out years of prior price appreciation. The 90% price cut to a landmark Chicago building highlighted below gives a sense of the magnitude of write-downs unfolding.

Chicago office buildings continue to get massacred…

A landmark Chicago Loop office building recently took a massive ~90% ‘haircut’

The 1.4M SF building sold for $41M or just $29 per SF

It last sold for $306M in 2018, per Crain

Absolutely brutal pic.twitter.com/EOqAGJCe7E

— Triple Net Investor (@TripleNetInvest) February 25, 2026

Residential markets have largely frozen on the still-massive overshoot between current asking prices and the level buyers are willing and able to pay. With sales volumes at 45-year lows in 2026, price discovery remains far below what most can presently fathom.

New home sales are approaching an all-time low in Toronto. Janice Golding has more on the struggle to sell recently built housing. Here is a direct video link.

If the Canadian average national home sale price were to return to even 2018 levels, it would require a further drop of 25% from 670K today to about $500k (and a drop of about 40% from the February 2022 peak of $827k).

If you think that can’t happen, you are not well-studied in the aftermath of real estate bubbles.

Broad price discovery is yet to occur in equity, credit and ‘alternative asset’ markets. There will come a day, there too, when people will look at their purchase prices and account statements from the glory days of the bubble and say, “What were we thinking?”

Thinking ahead is challenging and important to try…

The artificial intelligence “scare trade” erupted again on Monday as growing concerns about the disruptive power of AI dragged down shares of delivery, payments and software companies, and sent International Business Machines Corp. to its worst plunge in 25 years. It began after a bearish report was published over the weekend by a little known firm called Citrini Research. The report, released on social media Sunday, outlined the potential risks to various segments of the global economy, using hypothetical scenarios set in the future, specifically calling out food delivery services and credit card companies as ones facing trouble. Citrini Research, founded by James van Geelen, presented a scenario set in June 2028 where AI’s disruption has caused mass unemployment for white collar workers, declining consumer spending, software-backed loan defaults and economic contraction. Still, the report notes clearly — “What follows is a scenario, not a prediction.” Alap Shah, co-author of a Citrini Research report and CIO of Lotus Technology Management joined Bloomberg China Show to discuss. Here is a direct video link.