October 06, 2009

Private Equity King Rubenstein: Crisis Implication And Investment Opportunities

David Rubenstein, the legendary founder of Carlyle, spoke for 30 minutes at The World Business Forum (#wbf09).  Carlyle’s funds have invested $50B + with an IRR exceeding 30% since the funds’ inception.  Highlights:

Rubenstein opened with an audience poll.  The consensus among attendees was pessimistic: taxes will increase; the worst isn’t over; real wealth won’t increase.   Over $14T of real wealth has evaporated in the Current Great Recession.  Here are implications: 

We have to cut spending dramatically and increase taxes.  Unemployment of 4-5% will not be the norm.  “There are no simple answers to address these things.  If I had a simple answer, I’d be a politician.”

The crisis has had a psychological impact.  Americans are less confident in the future and less trustful of government and big business.  Americans are less willing to take risks.  We see a tendency towards prioritization of liquidity, a willingness to accept lower rates of return, greater public concern about executive compensation, diminished support for entrepreneurial activity, and less interest among young people in financial careers. 

“Where would I invest?”

“Advice for the audience?”