Warren Buffett: Private Equity Firms Are Typically Very Dishonest 

same thing with my company. firing the best of us who uphold the culture, jacking up prices, hurting the customer, running it into the ground.

PE has a very simple game, cut costs, which usually means cut wages to the bone and quality of materials down to the cheapest, sell off assets and lease back if necessary, jack up the costs, take out "franchise fees" ( or similar bonuses ) then on sell to a gullible public via a flashy float.

Just had this experience needed a tooth extracted and felt like I was being sold a timeshare.

Not all PE firms do this. Yes many do, but there's some good PE firms out there. But by and large, they tend to cut quality and extract as much profit as they can before they exit which is why they have such a bad reputation. When it comes to small food and beverage companies like restaurants, dentists, etc where profit is secondary to customer satisfaction, I would immediately stop being a customer if it were me if I knew an acquisition was coming

@@MarketWizard546 Would you happen to know of any of the PE firms that don’t cut quality and ruin the business? I’m genuinely interested in seeing good examples to counter the awful ones like Red Lobster.

Depends which fund owns the company you work for. Not all are pump and dump

They support Aipac.

How many millions do you have?

Dave Ramsey is out to lunch. He gives a lot of misinformation. Stay away from Dave.

@@whatever9506 if thats your measure for who to trust that's hilarious, what a moron

@@TravisMcGee151 Warren Buffet gives good advice for people with money, Ramsey gives good advice for the bottom 90%. Different people need different advice. I listen to both, I listen to their arguments, and I make my own decisions.

@@TravisMcGee151 He gives good advice on paying off debt. I don't follow his investment advice though.

Fees are based on the size of the asset. Asset goes down - fees go down. Returns are lower, they don't hit the watermark to earn more.

​@@justinmiller7083Nonsense BS. PEs create massive debt obligation for acquired companies and then liquidate assets like buildings and property to generate additional cash for the ongoing PE shell game of paying the debt they imposed on the business. Essentially making the business pay for PEs debt for free while they collect management fees. Then on top of debt the acquired company now has to pay rent for original buildings they owned creating additional cash flow disaster. Then PE files bankruptcy on acquired company screwing over crefitors and employees. Meanwhile PE has made away with the proceeds in cash from asset liquidation before bankruptcy filing.

It's not that simple, you should look up how the fees are calculated. They lessen the risk for the partners drastically.​@@justinmiller7083

@@justinmiller7083 I can ask for "2 in 20, because I can't get 3 in 30."

They are leeches.

Read the book that just came out "Plunder : private equity's plan to pillage America"

If PE doesn't serve any real function then why does it...continue to exist? In my experience, if something doesn't add value, it eventually goes out of business. The only exception to this is if its existence is due to government monopoly/regulation/franchise, which isn't the case here. So if PE firms truly don't add any value, why do small companies keep....using them for going on 4 plus decades now? Are they just all collectively stupid?

@@mlh5434 Small companies need PE because otherwise they don't have access to capital and they can't use debt. PE firms add value. Investors are happy, businesses are happy, that's why PEs are still out there.

Buffett is the epytome of cronyism and why most american jobs fled and were traitorously exported offshore while this old crook uses charities as a facade to avoid legally paying taxes PE is the fair chance the small and mid business have to compete with big crooks like Berkshire and other oligarchs that are politically sponsored and well connected to Obama and washington I would remind you he sponsored obongo's presidential campaign

@@stevejackson7594 And if you're looking for a rebuttal to that dishonest book, listen to David Bahsen's review on the Capital Record podcast, 8/17/2023.

Seriously? Hero worship is for children.

So Tony Robbins 🤣

@@Discursion-f8w yeah, and the people who claim to be better than buffet tend to be respected on the basis of hero worship rather than the basis of accumulating billions and billions of dollars for themselves and even more for their shareholders ​​⁠

The key is saying you follow Warren and get people to pay you for showing how Warren does it…lol

Well, maybe with large sums of money you could be in the ball park IDK... but it's very easy to out-trade his returns from a percentage standpoint. Beating the S&P 500 is actually very easy from a technical standpoint, you can do it in multiples. The question is do you have the psychological skill as a trader to maintain that, and not blow up. To weather storms, etc.

O OH GOD YES!!! That is what I do. And it is more fun that way.

Amen

Ah yes try to win at a game most fail at instead of focus on growing your own business...

Most people don't know what the fuck they are doing. Investing can be complex and you don't know what you don't know with most products. For most people it's a bad idea to manage their own money

Exactly, always know where your money is invested in.

@@W.C. That's the biggest reason to use a private investment firm. You have them watch the short term numbers, and trust that they give you a good long term number. The issue is that no one actually checks to see what the investment firms are doing, so they are left free to control vast parts of society using other people's money to do it.

When using other peoples money will you be really careful?

@@glendavis1266 Ask Congress

It's not that difficult to compute the worth of things that you mentioned. Problem is that Canada is a communist country, so the market is heavily manipulated by the government.

@@alexeivoloshin5984 how is the invasion going Alexei?

Citizen United significantly diminished voting power and voter representation. I'm afraid most younger people don't understand the implication and will not be aware of the impact until it's too late. Distracted.

We can sustain 400 hp..

McDonald's did him well

I mean, his body. The rest of it is another story.

His time is coming soon.

And partner Munger is even older.

@@A-X-25 he should have retired half a century ago. He can’t go have fun now. He wouldn’t know what to do now.

Private equity investment has the same goal as any other investment: to get the best possible return. The cliche of buying asset and then running it into the ground is not rational behavior, so why would they do it? Often PE will invest in distressed assets that have no other access to capital. The alternative is for the enterprise to fold. Also, no one forced the owners to sell. Most of the time the enterprise is able to be turned around and built into a successful company. Sometimes it's not, in which case the assets are liquidated. Yes, salesmen will always try to put lipstick on a pig and exaggerate their return. But that is not unique to private equity. Perhaps this video should have been titled, "Salesmen are typically dishonest".

@@ep4169 But how come we collectively accept "get the best possible return" without demanding "tempered by ethical standards that uphold the basic humanity of affected stakeholders?" We all just accept the premise when the premise has no bounds, that gives any bad actor the excuse that they're only "doing what's best for the investors".

@aformist Good question. Of course we would want all actors in an economy to act ethically and humanely, whether they are entrepreneurs, investors, unions, or employees. But no system can guarantee that kind of behavior without resorting to coercion, which both takes away private property rights and imposes external values on those who have risked their own money. A better way to ensure good behavior is to make it in the best interest of the parties involved to do so. But this is where the argument of the critics of PE falls down. When they accuse investors of driving their assets into the ground, they are accusing them of basically irrational behavior. Why would someone buy an asset simply to destroy it? If the asset is beyond repair, then of course the only alternative is to liquidate it, just like taking your old car to the junkyard. But if it can be saved, then a rational actor would work to rehab the asset to maximize its value. Sure there may be some outlying bad actors but if the correct incentives are in place then by and large the system works. The failure mode is actually where the market system demonstrates its superiority. Enterprises that do not provide value should be ended and the capital put to better use. Contrast that with worthless government or university bureaucracies that have long outlived their usefulness but continue to draw money for decades because there is no impetus to kill them off.

@ep4169 I can appreciate the sentiment, but there absolutely are incentives to dismantling an "asset" you invested in. It also seems disingenuous to reduce PE investment as simple assets providing value when there is historical evidence they view their acquisitions as "Storage Wars"-esque collections of more-discrete valuable assets for appropriation or sale, while leveraging said acquisitions for more credit to feed the beast.

@@ep4169 I believe the American Corporations need to kill off the wasteful companies & let the strong survive. There's just too much corruption in American companies today as well as the government supporting companies by giving them free money. Remember when Chrysler was bailed out by the u.s. government. We the taxes payers paid for Chryslers mistakes. Bad money always pushes out good money if given the opportunity. PE acts like the Mafia or crime inc.

Truly the greatest generation. Few of them left. I worry about what'll happen to Costco when its founders die.

@@GlennC789 Yeah. Anybody see the OXFAM "Survival of the Richest"? Poor 1% only pulling down a couple billion dollars each day. Even if they started paying taxes now, it would be decades before the disparity gap got to be reasonable.

@@worldmikel Oh I'm 100% with you. But It does seem the "greatest generation" folks at least had some sense of civic responsibility, like Buffett and the Costco founders I mention. Whereas now it's just 100% screw everybody any way you can, no apologies no excuses.

@@GlennC789 Not so sure about that. He's part of that billionaire "pledge" to Bill & Melinda narcissistic philanthropy group. They haven't signed over their wealth, just pledged it. Like PBS fundraising drive. Empty promise until the funds are transferred. And these "philanthropic" groups? Whew! What a crock. Veiled self-service.

My words don’t count, but I agree with them. I’ve been observing the entire environment and there is difficult to find anyone honest nowadays.

Just wait until Warren and Charlie pass away. BRK will likely do a 180 to the dark side like Vanguard did after Jack left.

@@damham5689 Vanguard is not a publicly traded company.

Look up Dow chemical with Berkshire , you’re totally brainwashed on him

Are you serious? He’s an ACTUAL scumbag! Have you not been following the railroad strike situation and his roll in denying safety regulations, union busting, and lobbying the government to deny basic humanity to people across multiple sectors?! F that guy billionaires are scumbags.

The actual good people are dying, being replaced by utter snakes and cynics. The world is going to get worse in the next few decades, I assure you.

Why? What life saving technologies have they invented?

I think the statement is a reference to their basic honesty and trustworthiness, as opposed to the inherent self-dealing and potential for fraud among the private equity crowd.

sure 😂

One down

RIP, Charlie.

Wow that's huge, how do you make that much monthly?

The first time we had tried, we invested $5,000 and after a week we received $23,400. That really helped us a lot to pay our bills.

Juliana is doing great things for this world and I'm on board with that! Slowly increasing and staking my investment while the ecosystem is developing.❤

Wow wow please is there any way to reach her services, I work 3 jobs and trying to pay off my loan for a while now, please help me..

@HEIDI39...THAT'S IT

What paid position do investors get? I don't know, so I ask.

@@elo5193 if you are part of a PE group and you put up 30% liquidity, ostensibly you have shares and get your return on investment. Since you are an owner you can then get a paid position in the company (like an office manager) and get paid through that avenue as well. Basically a “no show” job.

@@marcrankin1707 That's regular practice? PE firms get returns on their investments in a business but also give themselves bogus "management" roles where they don't do anything but get paid?

@@elo5193 it’s not that they don’t do anything, but they make take a position in a business where they have no expertise. For example, a business can acquire a medical practice and one of the investors can be the office manager. He/she may have experience running a company, but not in a healthcare setting. The grassroots healthcare delivery is patient care driven and approaching with a strictly business minded models is inherent with divergent interests and a prelude to conflicts. One is focused on revenue generating, the other with quality delivery.

@@marcrankin1707 Do you mean a managing director or VP get put on the project and get a project management roles? So they get paid by their firm and then through their firm again but for the management role of the project? How significant are these roles compensated?

The top experts, however, have access to confidential information and data that is not made available to the broader public. Being knowledgeable enough to use them successfully is quite another. Big returns, not changing stochastics, are the key. Rewards and risks must be balanced. To reach your aim, pick the right size and turn your edge as often as necessary.

You're not doing anything incorrectly; you simply lack the expertise to capitalize in a down market. Professionals with extensive expertise who must have witnessed the 2008 crisis are the only ones who may profit significantly during turbulent times like this.

@@oscarjiron6974 I require suggestions on how to restore my portfolio and create more effective strategies in light of the huge declines. Where can I locate this instructor?

@@AnthonyHart34 You may locate "Ruth Loralann Brennan" using a search engine, of course. But I'm not sure if I have authorization to talk about this. She received a lot of media attention in 2020. She manages my portfolio and serves as my mentor.

tips on living a life with several wives?

The employees can quit at any time 😂 fool

@@kxkxkxkx Unfortunately that's not a valid option for most people.

At what company are average employees not wage slaves?

mind blowing believeable.... good God...

@@kxkxkxkx No they can't, you sick f**king ghoul. Disgusting, bootlicking, scumbag, class traitor. Enjoy your chains, slave.

Excellent choices having a great savings and more streams to earn makes life goal’s easier but our way of life needs better alternative,at the same time, people also need to be more responsible. I know for a fact that there's a lot of people that simply don't make enough, I make roughly hundred plus a year and in California, thanks to rent inflation alone eat up almost all of what I make, with dependents and other obligations included, it's easy to end up with zero. however it’s a good time to add to existing asset holdings as follow -on opportunities

I have a full time job. I'm just looking for investment that won't require my time that's very profitable as well. i don't have much to do real estate.

Great plan . Started investing at 37. Sometimes I wish I started earlier. it might seem like you are wasting your time now but you're making huge changes and progress. Watch out in nearest future your friends will regret why they didn't take this bold step. Keep it up.

@@FrenkVanDerBoon I do not disagree, there are strategies that could be put in place for solid gains of economy or market condition, but such execution are usually carried out by investment experts with experience since the 08' crash

@@janebeazleym i'm blown away! mind sharing more info please? i am a young adult living in Miami where i've encountered several millionaires, and my goal is to become one as well

Sorry, what is SPX?

@@MadLadsAnonymous SPX = S&P500

Ridiculous. I agree.

That is the reality, my friend. Unfortunately.

Top quartile PE performance absolutely annihilates the SP500 and it’s not even close. Invest in shitty managers and you will have shitty performance, but if you can find any Cambridge Associates benchmarking data you’ll see top quartile performers in PE regularly outperform the market by a wide margin.

Of course you did. These guys are worth billions from investing. Why would you expect people making 100k to 200k a year to be as insightful?

@@RU-vid304s The worth of a man's labor is not necessarily related to the salary he receives for it.

@@boggy7665🔥

I am information gathering out on PE Fund....this is my 2nd video ....who is Graham? Book Title???

Buffett and Graham are obsolete today and of course no rich man will ever tell you 100% how or from whom or in what terms honestly got that initial seed money for his so much trumpeted value investing as if he invented hot water again or the wheel The period between 1950 to 2000 was probably the best time in history (Bull market with few exceptions) for all not only for Buffett the ocean that rises lifts all boats regardless if they are yachts or wooden Today is completely unpredictable if you will hold shares or mutual funds for the next 10-30 years you will be very very sorry unless you keep a very close eye and take active participation because many big business will no longer exist in 10-30 years from now due to AI and other disruptive tech and events in todays market you can only plan for one to three years and then either sell or hold depending on context and situation long gone are the old days where you slept at night not knowing for decades what your money is doing in a forgotten mutual fund

Agreed. Capitalism is a theft

How long ago??

True he's crook himself but he's being 'honest' about pe lol

I understand the requirement in Australia to automatically be forced to put a decent chunk of your paycheck into the retirement system, but do you get no say at all in what it invests in? Most employer plans in the US offer a decent range of investment options from which the employee can choose; they might not have every option, but they're given at least some broad-based option.

@@stevenglowacki8576 Workers may choose their pension fund (we call them superannuation funds) but the industry is dominated by a few funds which we call industry funds and are the equivalent of US based public pension funds. These account for about 80% of the industry AUM and are populated by clueless academics, public servants and ex Labor party hacks; it is these funds which are putting more and more of workers seized money into illiquid "alternatives". The other fund options are expensive for-profit funds run by fund managers who consistently underperform the market. That is to say, we have the choice between a horse's anus and a donkey's anus. Only very recently has Vanguard introduced a low cost index fund based Superannuation product (much to the chagrin of the incumbents) and I transferred to them as soon as I could.

I guess I didn't realize the lack of good investment options in general outside of the US. I suppose the superannuation funds have specific legal requirements that need to be followed so it's not like every fund company in the US can just open up one in Australia easily, and they probably don't see the market as large enough to bother.

@@stevenglowacki8576 its a 3 trillion dollar market and counting.

@@stevenglowacki8576 Biased nonsense.

You make a claim .how about you back it up with facts

Because your government is corrupt

What’s 3G?

@@eliawoke3548 3G Capital - PE firm from Brazil that is Berkshire's partner in Kraft Heinz.

Zingggggggg

What?

What’s non?

@Troy Hoffman There are proposals to ban non-compete employment contracts nationally that restrict people from changing jobs. CA already has this.

Non-competes have already been unenforceable for a very long time

How does this affect PE firms?

And sharp! Amazing!

He’s dead, Jim.

Let them keep on dreaming and praising "value investing" all they want.

@@MhdalzeinHuh? He’s beaten the market consistently over a long period of time. So yeah, I’d say value investing works.

@@programking655 not in terms of risk adjusted returns.

Statistically he's been right way more than almost anyone else, that's why he is where he is. Past results something something, but malice is not his character.

I'll tell you what's happening in Winnipeg its a shit hole lol lived there for 2 years wouldn't go back if you paid me. Manitoba is the worst province I've ever lived!

It is also the truth

At 90 and 99, and given how Berkshire is doing, all covered and insured... I really doubt they are worried about competition!!

Not really. Buffett and Munger is running a public holding company with essentially 0% management fees and 0% performance fees. They don't gain or lose anything if pension funds invests in them or in Private Equity. They do compete on deals related to buying private companies, but BRK is mostly focused on public equities.

@@artandarchitecture6399 you are smart!

PE is a successful scam for the dense.

Nice try. Private Equity is an issue.

@@bobfg3130how exactly is private equity in issue? I work in the sector myself and what he says about funds is definitely not true.

PE firms can “mark-to-make-believe”. And because they don’t mark to market returns (so called IRRs) look smooth and stable which gives a highly inflated Sharpe ratio. Rarely do PE firms take impairment charges (ie mark down their investments) during the tenor of a particular vintage. Only when they need to exit after 5 or 10 years will they realise losses. This keeps values inflated which allows PE firms to keep charging a higher cost of carry. Even independent fund administrators are perversely incentivised to keep values inflated because they charge on a basis point model. Also, PE firms essentially leverage (ie LBOs) the hell out of investments using the free cash flow of the underlying company to pay off interest expenses, which usually leads to cost cutting at the company instead of investing for long-term growth. The return profile between the investor and PE firm is asymmetrical. Essentially investors absorb almost all of the losses because PE firms only put up a small portion of their own capital, while investors put up most of the capital whilst the PE firm charges large management fees on committed, called and uncalled capital during the tenor of a vintage. Leverage juices the returns for both the investor and PE firm when things go right, but disproportionately negatively impacts the investor when an investment sours.

@Amnesiaasdf - just wondering if you feel any of my points are worth contending.

@@Amnesiaasdf1239 Private equity is an issue. If you haven't figured that out, that's your problem. You work in the business? You either don't understand it properly so you working in the business means 0 or are lying. Which one iS it?

Yes the Warren buffet Charlie Munger school of investing

Easily defeated by ten 20yo kids

Quite

Yes😂

No?

I think he’s a terrible person who’s only accomplishment is riding others success and then acting like it was his idea from the start. Before you pile on me,answer me this question what did Warren invent?

he is afraid of competition he used other people's money as well in his humble beginnings even if he inherited a modest business from his father also politician and businessman his value investing is a dead concept in the 21st century when so much disruptive new tech known and unknown emerges year after year a lot of big business will go broke if they ignore AI (artificial intelligence and automatisation) and emerging big economies competitors like Brazil India or Indonesia

@@opreadumitru1 who then do you recommend to listen to for investing, economic and personal finance views

@@_Meng_Lan joe knows plenty of what's going on when he has all of his pills for those few hours per day. That's not being ageist that's being realistic. Age hits everyone differently.

Joe is just fine, but your judgement is questionable. Anybody who lets their perceptions be clouded by politics isn’t going to do well in the investment world.

I agree. Maybe go a step further and analyze the alternatives.

Problem is when they try to sell something to someone who affects your livelihood or community and you get no say

Turn those machines back on

Every corporation is supposed to be maximizing shareholder return.

They are not that bad. It is only that nobody ever knows what they are doing.

@@andrewmaina8422 huh? then that’s bad 😅