Excess Returns The Bubble You Can’t Exit | Dan Rasmussen on the Private Equity Trap
Jan 29, 2026
Dan Rasmussen, founder of Verdad Advisors and a systematic, research-driven investor, critiques private equity, private credit, and tech concentration. He tackles why private assets underperform, the risks of democratizing illiquid investments, AI-driven capital cycles and fragile Big Tech economics. He also highlights international small value and the challenges and new approaches to modeling biotech.
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Growth Multiples Can Mask Bankruptcy Risk
- High valuations create 'growth bankruptcy' risk where richly priced winners can suffer catastrophic multiple compression.
- The MAG7 concentration plus AI CapEx raises valuation and execution risk for US-heavy portfolios.
Diversify Away From U.S. Concentration
- Rebalance away from extreme U.S. concentration toward cheaper international markets.
- Move gradually toward a more diversified allocation (e.g., toward 35–50% international) to reduce valuation risk.
Small Caps Wait For A Leadership Flip
- Market leadership flips typically occur after crises, making US small caps a possible future beneficiary.
- International small value currently offers a more compelling and cheaper opportunity than U.S. small caps today.