The Great Valuation Divergence
The S&P 500 closed yesterday, November 24, 2025, at 6,142 points, marking a 19.4 percent year to date gain. While public markets celebrate, a structural rot is forming in the $15 trillion private markets. I have spent the last 48 hours reviewing the Q3 2025 filings from the major alternative asset managers. The numbers tell a story of desperation, not growth. The bid-ask spread in the secondary market for private equity stakes has widened to 1,400 basis points. This is not a ‘transforming landscape.’ This is a liquidity trap. Institutional investors are locked into 2021-era valuations while the cost of capital remains stubbornly high at 4.75 percent following the Federal Reserve’s November pause.
Dry Powder is Smothering Returns
Capital is no longer a resource; it is a liability. Global dry powder—committed but uncalled capital—hit a record $2.62 trillion this week. Managers are under extreme pressure to deploy this cash into an environment where EBITDA multiples for mid-market firms have ballooned to 14x. I am seeing firms overpay for infrastructure assets just to satisfy deployment mandates. Per Bloomberg’s Monday morning market wrap, the premium for private infrastructure over public utilities is at a ten-year high. This is the ‘BlackRock Delusion’ in action. The push toward $32 trillion in alternative assets by 2030 is driving a quantity-over-quality mandate that will inevitably lead to a cycle of massive write-downs in 2026.
The AI Infrastructure Black Hole
The market is currently obsessed with AI-driven innovation. My analysis of recent deal flow shows that 62 percent of ‘infrastructure’ capital raised in the last six months is earmarked for hyperscale data centers. This is a concentrated risk. If the AI revenue ramp fails to meet the 2026 projections, these physical assets will become the ‘zombie malls’ of the next decade. We are seeing private credit funds provide 80 percent LTV (Loan-to-Value) financing for GPU clusters that depreciate in 36 months. This is not sustainable asset management. It is a high-stakes gamble on a single technological outcome.
Asset Performance vs. Public Benchmarks
The following table tracks the performance of major asset classes as of the market close on November 24, 2025. Note the significant lag in Private Equity compared to the AI-fueled public tech rally.
| Asset Class | YTD Return (Nov 24, 2025) | Avg. Fee Structure | Liquidity Profile |
|---|---|---|---|
| S&P 500 (Public) | 18.1% | 0.03% | T+1 |
| Private Credit | 9.4% | 1.5% / 15% | 7-10 Years |
| Infrastructure (Digital) | 11.2% | 2.0% / 20% | 12 Years |
| Private Equity (LBO) | 7.8% | 2.0% / 20% | 10+ Years |
Visualizing the Private Asset Inflation
The Secondary Escape Hatch
The only vibrant segment of the private market today is the secondary space. General Partners (GPs) are increasingly using ‘GP-led secondaries’ to move assets from one fund to another. This is a accounting gimmick designed to delay the realization of losses. According to Reuters’ latest report on institutional flows, secondary volume is up 40 percent year-over-year. Investors are selling at 20 percent discounts just to get their cash back. If you are a limited partner, you aren’t looking for ‘diversification’ anymore; you are looking for an exit. The ‘Future of Alternative Assets’ isn’t about $32 trillion in AUM. It is about who is left holding the bag when the valuation marks finally meet reality.
The 2026 Maturity Wall
The data points to a singular moment of reckoning. On January 15, 2026, the first major ‘Maturity Wall’ of the post-ZIRP (Zero Interest Rate Policy) era hits. Over $450 billion in private debt must be refinanced at rates 300 basis points higher than their inception. Watch the 10-year Treasury yield on that date. If it remains above 4.2 percent, the private equity model of the last decade is officially dead.
