there is an argument to be made that investors with long investment horizons and predictable flows aka insurance companies and retirement funds are exactly the ones who should be taking risky long term bets instead of looking to next quarter

Or perhaps not. You don't want to retire at a moment when the retirement fund is down 20% and decides to pay no interest on your savings for the next 10 years. Or not pay you at all.

It doesn't really matter. 20% down from peak after 30 years of growth is going to be far over your book value.

The Dotcom Bubble isn't coming back for 20%. It's coming back for everything.

Isn't this precisely what target date funds are for?

they don't solve anything, because the market can still be down at the moment when they move your wealth to a less variable market.

There is, but the presumption in that argument is that those risky bets bring higher returns. If that assumption is invalid, the argument falls apart. (I'm not especially confident myself that private credit can actually bring higher returns over a long time horizon.)

I swear to god, people use "high risk bet" as synonym for "sure gain with no danger". You see it on HN all the time.

The defining thing about "high risk" is that risk part will happen and that creates a lot of loosers. That is the whole point!

But HN treats "high risk" as something that is expected to always give you reward.

russian roulette?

Its high risk no gain game. Kind of opposite.

All I'm getting at is that EV matters. Putting a bunch of chips on the roulette table has high risk, but negative EV -- it's a terrible investment. Loading up on risk is not inherently EV-positive.

Then again, when you look at the performance of your typical pension fund or university endowment, and then see the actual incentives of the people managing the money (as there's ultimately managers there looking for their personal best interests), then you see that said argument one could make is not exactly going to do well empirically.

The main reason we are seeing private equity now being offered in 401ks isn't that it's going to be great returns for your average mostly-self-directed worker, but because those managing private equity believe they will make more money if they managed more capital. There's no guarantee that they are making any choices there that provide good risk-adjusted returns. But the managers sure would be making more on fees.

No, these are who should make conservative slow raise, be sure not to crash bets. Cause when they crash, whole lot of people suffer.

They should impoverish their retirees by like 10x in order to avoid having a distribution of retirement results in the 8-12x range? Conservative investments lag even the worst-case equity investment result over any significant, retirement-relevant time range.

High risk investment by normal pension fund is still super conservative compared to risk traders.

The language the author uses there obfuscates rather than clarifies. 401(k) holders can choose to invest in private credit, but it is never going to be the default investment option, and they control that choice. (Unlike public employees, who typically have no control over how their pension savings are invested.)

I'd like to see some quantification for their statement. It's unclear to me how much has actually been invested in private funds. I think that pensions invest, (and that the economy is linked together) is a far more persuasive (note that neoclouds and the hyperscalers are all public as are some of the private credit firms and banks bankrolling the build out).

I second this, has anybody properly measured how much has actually been invested from private funds/pension funds? Is this really difficult to do?

There used to be proxy voting/corp gov firms that provided money managers guidance on their ERISA obligations for, say, OHSERS. I think participants just get fee info but it's been a while since I thought about this.

I think the answer is extremely little.

> the $15 trillion held in private sector workers’ retirement accounts is now, for the first time in history, available to be invested in private funds.

The article acts as if this means there are $15T of funds that Coreweave can tap into at will, but all this means is that 401k plan admins are allowed to add private equity to the list of options in 401ks. I expect quite a small percent of plan participants to actually make use of said options even IF they are added, unless plan admins start changing the default investments to include them. Not saying that can't happen, but it hasn't happened yet.

Specifically I believe the concern is public pension funds.

Your 401K is invested however you choose, but the people with pension plans don't get any input on how those are invested. They have historically been cesspools of fraud and shady deals.

You have the option of rearranging. your 401k investments where you can choose to invest in individual companies instead of the grab bag fund where the managers invest in a little bit, parceled out to many companies where they give equal weight to investing in Intel, Dell, Microsoft and Apple. Which is a horrible deal because Apple, for example, has outperform those three companies by a wide margin over the last 20 years.

Note: you have to go out of your way. to make this happen. Most funds prefer to dump everything together, so they don’t have to make individual tough decisions.

not all those 401ks offer the level of granularity you're espousing, i've been looking to divest certain holdings based on religious views and can't figure out how to blacklist certain companies directly.