Q: Is Private Equity Lending Creating A New Financial Bubble? Sam, New Brunswick, NJ A: Let’s start by defining what a market bubble is: An asset bubble occurs when an assets price far exceeds the asset’s intrinsic value, which really is a calculated or measurable value. For example, during the real estate market bubble, NJ real estate prices in 2005 based on average annual appreciation reached 2020 levels. Since the global financial crisis there are many former bankers that have set up private equity shops that have been doing a lot of lending. These funds have filled the void left by banks who have tightened their lending standards. Asset values have risen quite a bit recently, but it makes sense […]
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