Peddling dismisinformation about Private Capital

Random Walk stumbles into a culture war, but only for a moment

• The New York Times spreads hateful dismisinformation about esteemed Private Capital manager, Jared Kushner

• Wandering the J-Curve with Persephone (reprise)

• Why can’t we all just agree that all media lies, no one is to be trusted, and yet we keep learning cool things, better than ever?

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Peddling dismisinformation about Private Capital (and political adversaries)

This was going to be a normal post, but then something got stuck in my craw.

Last week, the New York Times (and senior reporter, Eric Lipton) nonchalantly whipped up some dismisinformation for fun and profit:

NYT

Kushner has deployed capital, charged lots of fees, and returned no profits . . . two years after his fund launched. Incredible.

A non-lying headline would say something like “It turns out Kushner’s 2-3 year old private capital fund is totally unremarkable, despite false accusations of impropriety by members of Congress and the media.”

You see, the fact that a 2021 vintage fund is all fees, and no profit is precisely what a ‘21 vintage fund is supposed to be doing. No private capital fund is expected to return profits in the first two years.

It would be like saying “BREAKING NEWS: borrower accepts millions in loans, and pays back only a fraction at a time!” Yes, because that’s called “borrowing.”

Still no exits for private capital (but especially not in the first 2-3 years, because that would be stupid

I mean, look at these “j-curves” (named for the totally expected negative cashflow in the first few years of the funds’ life):

MSCI

You can see the “tale of two vintages” in both Venture and Real Estate.

The ‘18-’19 vintages are really going sideways, wandering the depths of the J-Curve with Persephone. What’s been true for the last couple of years continues to be true: there are no exits (i.e. the profit-making thing) for Private Capital.

Behold, unrealized asset growing, as they are not sold, and therefore don’t return profits to investors, whether Kushner’s or anyone else’s:

Asset values have grown exponentially, doubling over the past five years.

But no, Kushner is different and bad, and the NYT caught him red-handed:

Mr. Kushner, in interviews with The Times, acknowledged that his firm had moved slowly at first to invest the $3 billion it had collected from its investors since it formed in 2021. He said that was, in part, because a flood of venture capital moving into markets made it difficult initially to find attractive deals. That meant a delay in generating profits to return money to his investors.

Kushner acknowledged that he . . . slowed deployment in an overheated market, and acted quite sensibly, relative to other investors(?)

Ah.

But, if you use the word “acknowledged,” followed by “he said,” then whatever follows sounds like a weaselly excuse for what we all really know is malfeasance.

But of course it’s not. It’s totally normal behavior. In this case, it’s actually smart, savvy and commendable behavior.

Actually, no, we all lie, and we all fall for lies

The NYT obviously knows that there is nothing weird or fishy about Kushner’s fund performance. Very smart people work for the paper, and if they didn’t already know (which they do), two minutes of research would be enough to see a non-story for what it is.

But the NYT (like other media companies) is not in the business of non-stories.

In this case, it wants to create a false impression of impropriety for its slack-jawed, brainwashed audience, and so the degreyded lady runs a whopper of a headline, and then seasons the hot mess with deceptive innuendo.¹

In other words, the NYT lies.

And yes, technically true statements intended to mislead are most definitely lying. Ask any securities lawyer. It’s fraud. A deceptive statement. 10b-5 all the way to the class action bank. To repeat, for all those protesting in their heads, the NYT knowingly took an entirely unremarkable fact, and worked very hard to make it seem remarkable, for the sole purpose of making innocent behavior look not-innocent.

That’s a ruse, a fib, a lie, a fast-one, a dismisinformation, a deliberate effort to mislead.

I suspect, however, that there will be no endless run of headlines about how “xyz politician ‘amplified’ the NYT’s lies about Kushner’s ties to the Saudis.”

So, why does Random Walk care about this?

Well, first of all, I was going to write about the j-curves anyway, and then the NYT story just kinda fell into my lap.

Second of all, the fact that the NYT lies is entirely unremarkable (or should be). That its audience takes the “hateful, divisive misinformation” hook, line and sinker is also unremarkable. “Partisan outfit throws red meat fibs to adoring fans and whips them into frenzy” is a dog bites man story, if there ever was one. Next up, news at 11: a politician exaggerates!

It turns out, you can’t trust what you read in the papers. Imagine that.

That’s boring, and Random Walk will leave it to the New York Timeses and the Fox Newses to call each other liars.

The only thing that’s remarkable about the NYT (and its audience) is that they appear to have convinced themselves that they are somehow different in this regard. It’s only the other guys who lie, and in fact, if it weren’t for that pesky first amendment, the right thing to do would be to “curb” those Twitters and Foxes and “stamp out misinformation for good” (as per, John Kerry, himself, a legendary fabulist).

There are even some (unnamed) ‘heterodox’ commentators, while otherwise sympathetic to critiques of the credentialed class, who have nonetheless tried to convince themselves (and others) that “no, the NYT really is more trustworthy, and there is no equivalency in lies, conspiracy theories and red meat dismisinformation.”

They are incorrect.²

The NYT lies pretty—an “artful pleading,” as the expression goes—but it still lies, all the time, just like the rest of them.

So, the next time those learned members of the commentariat try to pull one of those, you can think of Random Walk (or this meme), and say to no one, probably, “no, you are incorrect.”

Not only is it true that everyone peddles conspiracy theories and tall tales, it’s easier if you simply accept the truth of it, and move on to something more interesting.

You can still learn things, I promise! It’s not all bad. There are smart and decent people too. It’s just business, baby, and that’s ok.

But, instead, what we get is ‘run Daily Mirror headlines, demand Oracle of Delphi status.’

Fin

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Previously, on Random Walk

Getting old is what we choose to do

Insurance and Private Credit, two peas in a pod

Banks reporting for duty (part deux)

Big banks reporting for duty

July 12, 2024 Weekly Recap & Good Reads

Insurance prices don't always make total sense, but it's not climate change

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1. Random Walk dabbles with the style, if only to demonstrate what it feels like, when the shoe is on the other foot.

2. Obviously so (and I find the whole endeavor to be strange). It’s both more correct and more functional to just be skeptical of what you read, recognize the incentives at play, and stop trying to claim an epistemic high ground one way or another.