Conference Presentation, Panel, Fireside Chat
Common Sense from Uncommon Investors | Global Conference 2025
Milken InstituteMichael Milken, Victor Khosla, Marc Lipschultz, Robert F. Smith, Jonathan D. Sokoloff, Anne Walsh
- The Treasury market is expected to trade in a range with 10-year yields between the mid-threes and mid-fours, while investment-grade fixed income is viewed as valuable at upper percentile yield levels over the past 25 years, allowing investors to target returns at rates around 4.5%.
- Investors are advised to prepare for a potential market correction driven by "gray swans" with an undetermined depth or duration, though the private equity industry, currently a $5 trillion market, is expected to grow and continue to be a significant part of GDP.
- A $5 trillion annual global infrastructure development requirement is predicted to necessitate public-private partnerships, with specific demand anticipated in power, AI, technology, communications, logistics, and manufacturing to support a "massive economic uplift."
- Generative AI is forecast to transform enterprise software into "agentic" tools, potentially enabling a shift from the "rule of 40" to the "rule of 70 or 80" and massive margin expansion, though companies failing to adapt may cease to exist.
- While some investors risk being on the "bleeding edge" of AI investments with significant losses, others focusing on infrastructure are expected to thrive, supported by a need for private markets to meet trillion-dollar capital requirements.
- The US fiscal debt situation is described as troubling and projected to rise as a percentage of GDP, potentially causing interest costs to crowd out other expenditures, despite expectations of continued economic growth domestically and internationally.
- Private credit firms anticipate differentiating through core missions of lower risk and predictable returns, with median investment sizes diversifying to typically include companies with $250 million in EBITDA and investment horizons extending up to 20 years.
- Portfolio managers expect to identify 15 to 20 significant annual investments in sectors like consumer brands, manufacturing, and packaging, focusing on under-managed businesses with large market shares in stable environments rather than secular declines.
- Operational growth is projected to average over 100% organic EBITDA growth during holding periods, with firms planning to build capabilities ranging from cloud to agentic environments and utilizing a "factory" model for transformation.
- Organizational scaling from 41 to 108 investment professionals requires increased process and structure, alongside a transition away from dependence on specific founders, emphasizing the need to teach sales skills and judgment to the next generation.
- Broad equity ownership is expected to remain a source of financial independence for employees, with thousands of individuals anticipated to share in cash exits, while private markets offer opportunities to serve a role in the economy during volatile cycles.
- The deployment of AI tools is predicted to accelerate business pace and cost reduction, though full trust for unsupervised autonomous actions regarding sensitive updates like wire transfers will take considerable time to establish.
- The integration of AI into 1 billion knowledge workers' roles is expected to impact employment dynamics, requiring high-level policy decisions to address job displacement and poverty alleviation, with potential for trade and GDP expansion to improve the human condition.
- Strategic plans include distributing AI curriculum to HBCUs and other colleges, while firms aim to maintain flexibility through communication to support growth in real assets like power plants, toll roads, and ports, particularly where development opportunities like gigafactories arise.
- Global restabilization or realignment is predicted contingent on administrative goals regarding taxes, deregulation, trade, and immigration, while investors are encouraged to seek opportunities regardless of macro and geopolitical fiscal paradigms.