▲ 89 points
back
84 comments
Aside, why not link the original video instead of a reddit post?
This point about "private equity" being a boogeyman is such a tired take, the vast majority of equity of companies are held privately, and the vulture PE firms do exist but are not as prevalent as people make it seem online. It's a meme that many people seem to have latched on when the vast majority of PE firms and companies work perfectly fine, buying a company, growing it, then selling it for a profit.
Aside, why not link the original video instead of a reddit post?
the vast majority of equity of companies are held privately
vulture PE firms do exist but are not as prevalent as people make it seem online. It's a meme that many people seem to have latched on when the vast majority of PE firms and companies work perfectly fine
My mistake, I should have said vast majority of companies, not equity in companies, are privately held.
If you're seeing it in the media, of course it's confirmation bias. Do you think it makes a good headline to say that a firm bought a company, grew it over 5 years, then sold it? Yet that's what happens in the majority of cases. Those in the media are the exceptions that prove the rule.
The Reddit video is actually 3 different clips stitched together, the sources are in the Reddit OP.
Did you know that there are more PE firms in the US than there are McDonalds?
https://finance.yahoo.com/news/now-more-pe-funds-mcdonald-12...
So while PE firms are not inherently “vulture” like, I would argue that the increasing number of firms fighting over the same number of assets to squeeze out returns (hopefully) above market returns leads to behavior that can be considered “vulture” like. For context, part of my work is to sell assets to PE firms
Is this some sort of shell game? Is there some benefit from artificially creating these firms to hold the assets? As I can't think there is enough demand to fully staff that amount of firms with all the full-time workers it would need.
It’s like everyone on social media learned about PE in the last ~3 years and now sees it lurking in every shadow
Also not particularly enjoying this new ragey vibe Steve has going but I guess it must be getting clicks because each video seems to have it turned up another notch
Reminds me of Nestle. When someone brings up Nestle and a vague issue with water, you know they are Reddit-educated due to their repeated nonsensical laser focus on one thing much like Kony 2012.
One of the former Linus Tech Tips hosts mentioned that Steve was one of the driving forces behind them leaving as Steve's content against LTT drove reduced views.
The current admin wants even cheaper money, which is likely to embolden well connected borrowers to pump up whatever they think will hold a bit of value. It was housing, which hit an equilibrium (can't milk it much more), then stocks, then gold and now silver and memory chips of all things.
I wouldn't limit this to PE, although they are feeding on cheap dollars too, but the general trend of big capital out competing mom and pop for future resources. We're all short on real goods (need to buy food, shelter, ram, etc... in the future) and big capital is putting the squeeze on our short position by bidding up real resources with cheap dollars. Regular folks cover at a loss, or we go bust, and that's the gamble we're being put in.
The cheap money is used for scalping the market on an industrial scale, in this process, inflation feeds on itself and people get robbed. I explained how it works here:
The problem with this argument is that there are players who are incentivized to play on the opposite side of the PE memory hoarders or cloud everything people.
One of the most valuable company namely Apple have been playing around with local everything for a while now.
Housing is a regulation(mostly) problem and govt has 0 incentives against the lobbyists and nimby crowd who support reelection bid vs largely marginalized or non voter crowd of immigrants.
It’s false equivalence in its full glory.
But but but how am I gonna justify my critical theory phd if I can’t blame all the things I don’t like on the existence of markets???
That's a rather uninformed attempt at sarcasm.
A "market" is just a set of regulations, there can be infinitely many such sets and thus infinitely many different "markets".
Do you think each of these "markets" is perfect and cannot be criticized because the "existence of markets" is beyond criticism?
>But but but
Go back to 4chan
I dislike these sensationalist headlines, but the housing one irks me the most.
PE didn't make housing expensive, your neighbors, grandma and grandpa did by restricting new construction. In cities dumb policy like the rent control did.
Stop blaming Boogeymen and actually look into issues.
The ram thing is unfortunate, but i don't really see a solution to it, for now.
46k up votes for this shit, Jesus Christ everyone's insane these days man
And along with permitting/zoning BS, there is also many other headwinds for real estate: high aggregate income, land scarcity, automation challenges (no prefab houses), and high labor costs.
Is land scarcity really an issue?
Genuinely asking, cause curious
PE didn’t kill housing. Private equity owns 2-3% of homes.
The national average obscures that institutional investors own 1 in 9 rental homes in Charlotte, 1 in 10 in Tampa, and one-fifth of all houses in some Atlanta neighborhoods. It’s likely to get worse too.
Have you tried buying a home recently? It’s very tough to compete against the all-cash offers from investors.
In the past few years I’ve been involved in 7 real estate transactions in California, and haven’t seen a single “all cash offer from investors” on any of them.
I hear this rhetoric a lot, but it’s almost always from people who have never actually been involved in selling a home, or are shopping for a home way out of their price range and were going to get outbid anyway.
OK, well are the economics in those markets worse than similar markets with lower levels of PE ownership of homes? Is there a correlation there that we can see in the data? Because otherwise stats from a couple moderate sized cities doesn’t seem that relevant to the nation as a whole.
Owning 1 in 9 "rental" homes means they own less than 1% of all homes.
You could make an offer on 40+ houses and will likely never be in a 'bidding war' with a big PE firm or a company backed by one.
PE is a boogeyman used by politicians to obscure the uncomfortable fact that the problem is the policies they themselves have implemented in pretty much every community in the western world (making building new stuff defacto illegal).
Time to build!
Wonder what the % of houses are sold that aren't for the owners primary residence. Also what % in cash.
Dead rich people don't own own anything, their heirs do. Keep that in mind.
The internet is so awful right now man. The illiterate, incurious populist rhetoric is getting so tedious. We are beating a dead scapegoat.
Buying memery is surely a future proof investment. It certainly was for my Amiga 500.
This is just patently absurd:
"AI" is just the vehicle (the excuse) - it's not the root of the problem nor is it the ultimate goal.
You can say they're fools if you want - you might even be right! But pretending like hundreds (thousands?) of board members across the world are conspiring to build a buyer's cartel (monopsony?) in order to starve out the PC Gaming market of all things is just myopic.
I hope I'm not too vitriolic, especially if the guy in the video is here -- I certainly share a lot of politics with him, and absolutely share his priors regarding PE. I just think it's extremely clear that this particular subreddit has "lost the plot" as the ~~kids~~ mid-30s nerds say. If anyone's not familiar, I highly recommend a perusal through the top posts of the past week/month...
You seem to have dropped the intended [1] link?
Ah, indeed I did! It's a searchable term in general, but I'm particularly fond of this write-up: https://plato.stanford.edu/entries/frame-problem/
yet again I am begging, weeping, pleading for markdown support on HN, my lord
About four years ago, during COVID, there was a shortage of chips for cars, fueled in part by PE scalpers hoarding chips. Sounds familiar?
EDIT: more accurate language
It is always amusing to me to watch people (gamers, in this case) slowly end up at “capitalism must be destroyed” when the market affects something they care about (PC parts becoming more expensive because of AI).
Developers too, as "vibe coding" takes hold, after a couple of decades of cheering on technology "disruption".
I think you're conflating executive rhetoric for the markets with what the average developer at any company believes. Do you really think the average Uber dev cares any more than an Uber janitor about summoning taxis on demand?
Why did you feel the need to write this quip? What do you add here and what was your point?
Does it bother you if people express negative opinions about the things that affect them?
I feel like everyone online is becoming some anti-capitalist socialist and losing all critical thinking and it's making me crazy.
Firstly, institutional investors own ~3% of single-family homes in the US , even in hot markets, they rarely exceed 10%. The lack of supply is outweighs the private equity problem.
GPUs are manufactured goods where production scales with demand. When AI investment inevitably contracts, that fab capacity will redirect to consumer products. I don't know where this idea comes from that NVIDIA is conspiring with these companies to never sell consumers GPUs. It only takes so many GPUs to build out a streaming service, would they just stop making GPUs entirely? It doesn't make any sense if you think about it for more than 2 seconds.
What's immensely frustrating is so much of this conspiracy shit, comes from the U.S. as well. A population where the median is living better every year, and better than 90% of the world. It's mind boggling, people don't understand how good they have it.
I'm not against progress, obviously make things better, but the perspective is important.
Becoming? I've been hearing these takes for over a decade.
Devil’s advocate: depending on the ownership turnover rate, the pricing impact of institutional investors could be outsized compared to their current ownership share if their property acquisition ramped up recently.
I think a better metric would be what percent of purchases are made by institutional investors. This is because pricing is based on sales, not on the overall stock including properties that have been sat on for a long time. Have you looked at that metric?
One heuristic that points in the direction of this being meaningful is that a lot of SFHs seem to be owned by old people who have lived there for a long time.
I agree that the comparison is stupid though since computer hardware is much easier to scale with demand. If anything this may show that hardware manufacturers are betting that this demand spike is temporary and they aren’t yet willing to ramp up production since they could end up sitting on unsold inventory after the bubble pops.
On the flip side of that, I’m tired of HN libertarians treating capitalism like some sort of infallible religion.
It's messed up and should be illegal in a normal functioning society.
Another recent video about it: https://www.youtube.com/watch?v=uvahiVBvn9A
>"normal functioning society"
We are not that at all. But then again for rich it pretty much is, just not 100% yet