Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / How Bull Markets Are Making Private Markets Platforms a Must-Watch
Transcript
- Lucas: Luna, Goldman Sachs made a move this week that says a lot about where this bull market is taking us. They launched a private markets platform aimed at wealthy individual investors — think people who want a piece of SpaceX or Stripe before those companies ever hit a public exchange. Luna: I saw that headline. It feels like the big banks are finally figuring out that the real money — and the real demand — is in private markets, not just public stocks. Lucas: Exactly. And it's not just Goldman. We've seen firms like Hamilton Lane, iCapital, and even some fintech startups building these platforms. But Goldman's move is different because of the brand trust and the sheer size of their wealth management client base. Luna: Give me the specifics — what does the platform actually do? Lucas: It's essentially a curated marketplace. Goldman selects a handful of private companies — late-stage startups, growth equity, sometimes buyout funds — and offers them to clients who qualify as accredited investors. Minimums are typically in the tens of thousands of dollars, which is still high for most people, but way lower than the traditional institutional minimum of a million or more. Luna: So it's like a VIP lounge for the merely rich, not just the ultra-wealthy. Lucas: Right. And the timing makes sense. The S&P 500 is at 7,524, up significantly from where it was a couple years ago. Public markets are expensive by most metrics. So investors are hunting for returns elsewhere, and private markets have historically offered a premium for illiquidity. Luna: But liquidity is the catch, isn't it? You can't just sell your stake in SpaceX on a whim. These platforms often have lock-up periods or limited secondary market opportunities. Lucas: That's the trade-off. And it's worth noting that SpaceX, specifically, has become a bit of a battleground. There's a headline from this week — bets against SpaceX have grown to 32% of the float, with Elon Musk warning short sellers they won't survive. So even private companies can have significant downside risk. Luna: 32% short interest in a private company — that's wild. I mean, SpaceX isn't even publicly traded. How do you short a private company? Lucas: Through derivatives and contracts for difference on secondary markets. There are platforms that let institutional investors take bearish positions on private companies' valuation. It's still a niche, but it shows the ecosystem is maturing. Luna: So if you're a retail investor listening — let's say you have a hundred grand to invest — is a private markets platform a good idea right now? Lucas: It depends on your time horizon and your risk tolerance. The bull market has made a lot of people feel invincible, but private company valuations can be opaque. You're trusting the platform's due diligence and the company's audited financials — which, by the way, aren't as standardized as public company filings. Luna: And fees. These platforms aren't cheap. Goldman will charge management fees and carried interest, just like a hedge fund. So you're giving up a chunk of upside. Lucas: True. But the counterargument is that the best returns in the last decade have come from companies that stayed private longer. Uber, Airbnb, Snowflake — early investors in those rounds did phenomenally well. The public market got the dregs in some cases. Luna: I've heard that argument before, but selection bias is real. For every SpaceX that returns 100x, there are dozens of startups that go to zero. The platforms show you the winners, not the graveyard. Lucas: That's a fair point. And it ties into the broader theme of this bull market: the hunt for yield and growth has pushed capital into less liquid, less transparent assets. We saw it with meme stocks, with cryptocurrencies, and now with private market platforms. Luna: Are we heading toward a scenario where retail investors are effectively acting like venture capitalists? I mean, the democratization of private markets has been a trend for years, but maybe this is the tipping point. Lucas: I think we're already there. The SEC has been loosening accredited investor definitions, and platforms like Forge and EquityZen have been trading private shares for a while. Goldman's entry just legitimizes it further. But it also raises questions about investor protection. The SEC's mandate is to protect retail investors, and private markets are inherently less regulated. Luna: So where does the bull market go from here? If private platforms siphon money away from public equities, does that change the dynamics of the S&P 500? Lucas: It could, but the effect is probably marginal for now. The public market is still enormous — the S&P 500 alone is over $40 trillion. Private markets are maybe a tenth of that. But the growth rate is faster. And as more innovation happens in private companies, the public market could become a graveyard of mature, slow-growing firms. Luna: That's a sobering thought. Let me ask you this — if you had to put a number on it, how much of the recent bull market's returns are attributable to private market hype versus genuine economic growth? Lucas: Hard to quantify precisely, but look at the macro. Real GDP growth annualized is 2.1%, up from 0.5% two years ago. So the economy is genuinely stronger. But the S&P 500's valuation has expanded more than earnings have. A lot of that multiple expansion is driven by excitement around AI, biotech, and yes, private market unicorns staying private and creating a scarcity premium. Luna: So the bull market is partly real and partly aspirational. And private market platforms are the vehicle for that aspiration. Lucas: Exactly. And that brings us to an interesting question: are we in a bubble for private company valuations? The 32% short interest in SpaceX suggests some sophisticated investors think so. Luna: But Elon Musk is famously anti-short-seller. He's got a track record of proving them wrong. So maybe the shorts are the ones who get burned. Lucas: That's the bet investors are making when they buy into these platforms. They're betting that the next SpaceX or Stripe isn't overvalued, and that the platform's selection process adds real alpha. It's a high-conviction play. Luna: Alright, speaking of high-conviction plays — if our conversations about money and investing have helped you think about decisions like this differently, you might consider supporting the show. We keep it ad-free, and listener support is what makes that possible. If today's episode was worth a coffee to you, you know the link: buy me a coffee dot com slash fexingo. Lucas: Yeah, it's a small gesture that really adds up. We genuinely appreciate everyone who chips in. It keeps us independent and able to dig into topics like this without any outside pressure. Luna: Totally. So, back to private markets — one thing I want to circle back on is the competitive landscape. Goldman is entering a space that already has some well-established players. How do you see the competition shaking out? Lucas: Good question. You've got the incumbents like iCapital, which has been doing this for over a decade, and the startups like Yieldstreet and Addepar. Then you have the big custodians like Schwab and Fidelity, which are also dabbling. Goldman's advantage is its brand and its deal flow — they're a top-tier investment bank, so they get access to the best private placements. Luna: But will they be able to scale it? Wealth management is a relationship business, and not every Goldman advisor is going to be comfortable pitching private market funds to their clients. Lucas: That's the execution risk. The platform is digital-first, which helps, but advisors need training and incentives. Goldman has been pushing into mass-affluent with their Marcus brand, and this could be a natural extension. But it's a different muscle than selling public stocks. Luna: Interesting. So we're watching a real-time experiment in whether the bull market can democratize venture capital without blowing up in retail investors' faces. Lucas: Exactly. And the outcome will shape the next decade of wealth creation. If private market platforms succeed, we might see a structural shift where the 'IPO' becomes less relevant, and companies stay private for 20 years. If they fail — if there's a scandal or a major valuation correction — it could set back the democratization trend for years. Luna: So what should a listener do with this information? I mean, if they're considering putting money into a private markets platform, what's your advice? Lucas: First, check if you're even an accredited investor — that's the gatekeeper. Second, diversify across platforms and vintages, just like you would with any asset class. Third, be prepared for a long hold — five to ten years minimum. And fourth, understand the fee structure and the liquidity terms before you commit a dollar. Luna: Solid advice. And maybe don't bet the farm on any single company, no matter how much you love Elon Musk's rockets. Lucas: Right. The bull market makes everything look easy, but risk is always there. Private markets can be a great addition to a portfolio, but they're not a replacement for core holdings like index funds. Luna: Well said. I think we've given listeners a lot to think about. Thanks, Lucas. Lucas: Thanks, Luna. Next time, we'll look at how the bull market is affecting bond markets — specifically, the carry trade we mentioned a few episodes back. There are some interesting developments. Luna: Looking forward to it. Until then, keep riding the wave — but watch your step.