[Week 18 of 2026] Marks, Machines, Microphones

Welcome back to Price and Prejudice with a few musings from Week 18 of 2026.

Two Wrappers, One Loan Book

This WSJ article describes a trade going on inside the private credit redemption wave. Business Development Companies (BDCs) come in two flavors: non-traded BDCs let investors buy and redeem at the fund's NAV during quarterly windows, subject to a 5% gate, while publicly traded BDCs sit on an exchange and trade at whatever price clears. Since last summer, the public ones have sold off and now trade at significant discounts to NAV, while the non-traded ones still transact at par.

The interesting part is that two funds with near-identical loan books, run by the same manager, can be marked at very different prices depending on the wrapper. The same kind of loan sits at $1 in one fund and 80 cents in the other. This is not quite a law of one price violation, since the portfolios overlap rather than match exactly, but it is close enough that the "arbitrage" works out. To the extent that markets aggregate investor views, the public BDC discount is probably the closest thing that private credit has to a market vote on whether the third-party valuation marks are real, and the vote right now seems to be negative.

Going forward, what's probably worth watching is what the public BDC managers do. If they believe their own NAVs, the rational move is to buy back their own shares at 80 cents on the dollar. For private BDC managers, the main concern is dealing with the prisoner's dilemma (or what economists refer to as strategic complementarities). The person standing in line to redeem their shares isn't necessarily worried about credit, but more about being last in line when the fund has already sold its loans to pay earlier redeemers.

Democratizing Quant Investing

According to this WSJ article, quantitative investment strategies run by banks sit at around $850 billion, providing a good source of revenue for companies like JP Morgan and Goldman Sachs. The article gives some examples of non-institutional investors shifting large chunks of their portfolios into these strategies. The pitch seems to be that you can buy a systematic trading strategy directly from a bank, structured as a total return swap, the same way you would buy any other derivative.

This reminds us of the ongoing democratization of private markets, which keeps producing stories like the non-traded BDC saga that we discussed above. Part of the differentiation is that the quant strategies are mostly about the rule, not about access. A momentum signal or vol-targeting overlay is the same trade whether it is run for Citadel or for me. There is also probably less concern about insider deal flow or liquidity transformation that breaks under stress.

But this scalability can also lead to two issues. One is overcrowding, with the ghosts of the quant crisis looming over us. Another concern is front-running by hedge funds, which would mean that the alpha will be arbitraged away in the process of democratization. So the real comparison may be that quant democratization fails through crowding, while private market democratization fails through adverse selection. The former is more of a capacity-driven delay, while the latter is a structural problem with who gets to see what.

Podcast Investing

Most academic papers tend to be a bit boring for non-academics, but here's a fun one: this paper by Marten Laudi and Janik Ole Wecks transcribe over 25,000 episodes from 93 investing podcasts and find that podcast coverage is followed by significant increases in turnover and retail trading, with the effects strongest on the day of the release. However, they do not find that trading strategies built on podcast content outperforms passive benchmarks.

It's useful to think about why anyone would go on a podcast in the first place if they had a real edge. One story is that you believe you can move the market or coordinate other investors into your position, in which case the podcast is less a place to share an insight and more a place to recruit a crowd. Another option is that maybe you don't have actually an edge, but the format pays you to behave as if you do. In which case, the rational thing to say is whatever generates listening rather than what generates returns. Either way, the null results on listener performance are probably not that surprising.

Podcasts

• This was an interesting podcast featuring Jean-Philippe Bouchaud who talks about his career transition from physics to finance. He talks about his background in the transition, the parallels that he draws between finance and physics, and why he spends a lot of effort producing papers alongside investing.