Investing Trends and Worries at Future Proof in California

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Bloomberg Audio Studios, Podcasts, Radio, News.

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This is Bloomberg Businessweek Daily, reporting from the magazine that helps global leaders stay ahead. With insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily Podcast with Carol Massar and Tim Stenovec.

Carol Massar (0:32)

Carol Massar, along with Tim Stenovec, live here at Future Proof in Huntington Beach, California. We are on Bloomberg Radio. We are also on Bloomberg Television, and on YouTube, and across our streaming. Throwing a couple of numbers, public versus private markets. The US public equity market, around $75 trillion market cap alone.

Global, global, private markets quoted often at $16 trillion, some say nearly $20 trillion.

Tim Stenovec (0:56)

Okay.

Carol Massar (0:57)

Just a couple of comparisons.

Tim Stenovec (0:58)

Not always mark to market at the same rate.

Carol Massar (1:01)

No, but I'm just, you know.

Tim Stenovec (1:03)

That's pretty huge. It is. No matter which way you slice it, or no matter how often you market to market.

Carol Massar (1:07)

And we can have a real treat, because we're going to talk private markets, and then we're going to get public markets, by two members of the Franklin Templeton Institute team. And I want to get right to it. Tony Davidow is with us. He's a senior private market strategist at Franklin Templeton Institute.

And he has been covering this area for a while. You actually came to Franklin Templeton, right, to help kind of create a platform.

Tony Davidow (1:29)

I was originally hired to build all of our alternative education, as we recognize this is new to the space. So again, some of the concerns about how did these strategies work, are they illiquid in nature? Yes. So I built all the alternative education, and then I create content, I write white papers, I have a podcast, so...

Carol Massar (1:48)

You do have a podcast.

Tony Davidow (1:49)

We're busy getting...

Carol Massar (1:50)

Alternative allocations, right?

Tony Davidow (1:51)

Alternative allocations. An award-winning podcast, I might add.

Carol Massar (1:54)

Congratulations, because I do feel like we increasingly are talking about private markets, but we also live in this world where private and public, like look at SpaceX, I think that's such a great example of something that stayed private for so long, public markets with quite a bang, and we're waiting for a couple of others. This kind of crisscross, what does it say to you?

Tony Davidow (2:14)

I think SpaceX is a perfect example. It's the one I use a lot when I'm speaking to advisors because I think for some of us who have been around for a while, we remember the.com era. And during the.com era, I actually worked at Morgan Stanley, so I worked with a lot of our banking clients, and typically there, of course, those companies were public.

They were private for three or four years. They went public. It was the only way to monetize the opportunity. You think of SpaceX. SpaceX was a 24 year old company.

Tim Stenovec (2:39)

It's basically older than Facebook.

Scott Dennis (2:43)

Yeah.

Carol Massar (2:43)

Not even a teenager. It's like a young adult.

Tony Davidow (2:46)

And a lot of difference were to dynamics, because SpaceX had the ability to raise capital in the private domain, so they raised capital. Elon Musk had the ability to have a long-term plan to execute that plan. And of course, when it went public, at a $2 trillion valuation, it was a much more mature company than those companies in the.com era. So I'd argue there's this convergence of public and private. We need to think of them differently. So to us, it's an exciting time. But we look at it through a very sober lens.

These are new companies. Not all of them are going to be great. They're not all going to go on the journey of a SpaceX or Anthropic or OpenAI. But what a great opportunity if we can give those to individual investors.

Tim Stenovec (3:25)

I'm glad you brought up Anthropic and OpenAI because you can't talk about the private markets without talking about those two companies. We don't know when they're going to IPO, but likely the valuations, if we go with what's out there right now in the private market, it's over a trillion dollars.

I'm wondering what the consequence of that is for other companies that have raised money, for other companies that are trying to succeed. Is there a crowding out effect happening in private markets?

Tony Davidow (3:51)

I'm not sure. I think it's a valid discussion and I think there's been a lot of debate in the market about, do you suck the oxygen out of the room with these large IPOs?