Be Liquid When Others Are Illiquid
An SREIT tender, dip buyers, the dispersion trade and nonfungible bolivianos.
Money Stuff this week has mostly been about capturing the illiquidity premium. On Tuesday, I argued that pooled retirement savings vehicles like pension funds and annuity companies have predictable cash needs and can lock up a lot of their money for the long term to earn high returns, while individual retirement savers can never be sure they won’t need their money back tomorrow and so demand more liquid investments.
On Wednesday, we discussed how those individual savers withdrew a lot of money from a Blackstone Group Inc. private credit business development company called BCRED, in part because of credit worries (loans might default, etc.) but also in part because of liquidity worries (people are suddenly paying attention to the fact that it is sometimes hard for individual investors to get their money out of private BDCs). I argued that, if you are a professional investor who thinks the credit worries aren’t too serious, this could be a good buying opportunity.