Randy Cohen 5.0 2 ideas

The speaker directly criticizes private equity's "volatility smoothing," calling it "lying" or "making up numbers," where reported prices are not tradable, especially during crises (e.g., Q1 2020). This accounting practice creates a misleading profile of high returns with low, smoothed volatility, which does not reflect true economic risk or liquidity constraints for investors. The traditional, illiquid private equity structure is unattractive because it obscures true risk and denies investors liquidity, especially compared to liquid public market alternatives that can replicate its factor exposures. If private equity funds can consistently generate alpha beyond replicable factor tilts and justify their illiquidity premium, the avoidance could be costly.

The speaker states that if AI leads to a future of material abundance where people work less, "there is an infinite demand for health and beauty," and concludes, "those seem like good areas to bet on." In a world of solved material production, human wants will shift towards non-material, experiential, and self-improvement domains, with health and beauty services being primary beneficiaries. The health and beauty sector is positioned to capture disproportionate demand growth in a post-scarcity economy driven by AI and automation, making it a compelling long-term investment. Technological change could radically alter conceptions of "beauty" or health delivery, disrupting incumbent business models. The thematic timeframe is also very long.