ExpertsFMAlan Waxman - Private Credit and the Modern Financial System - [Invest Like the Best, EP.466]
Invest Like the Best with Patrick O'Shaughnessy · April 8, 2026
5 Selected Lessons:
heuristic · 2 reasoning_pattern · 2 priority · 1
Define success as relationships/self-respect, not money/power/fame
Source
Invest Like the Best with Patrick O'Shaughnessy — Alan Waxman - Private Credit and the Modern Financial System - [Invest Like the Best, EP.466] (April 8, 2026) · at 54:55 ▸
When this applies
when any high achiever is choosing what objective function to pursue once basic financial/professional security is established
The takeaway
Rank relationships and integrity/self-respect above external status markers (money, power, fame), because only the former yields a sense of fulfillment that holds up in retrospect.
Why it works
Money, power, and fame are an unfillable cup — pursuing them creates an ever-expanding target that never satisfies, whereas relationships and shared experiences with values-aligned people produce a stable, retrospectively-satisfying sense of purpose.
One level up
Objective functions anchored to external, comparative metrics are structurally unsatisfiable; objective functions anchored to internal, relational metrics are stable.
Where it stops holding
This stops working as advice for someone who hasn't yet secured basic financial stability, where pursuing money/status may still be a rational near-term priority.
Detail
hierarchy:
- 1. Doing great things excellently with people who share your values, competing against yourself not others
- 2. Being the best parent/spouse alongside professional excellence (not at its expense)
- 3. Relationships and shared experiences (the 'Hui') as the actual measure looked back on at 80-85
- (implicitly last) money, power, fame — described as a cup that never gets full
rationale: The purpose of life for me... it's about all those relationships you form and those experiences you go through with people.
In their words
Once you start to prioritize that, that's a cup that will never get filled. Keep trying to fill the cup, and the cup keeps getting bigger and bigger. That cup never gets full.
Market mechanism over legislation as the preferred disciplining force
Source
Invest Like the Best with Patrick O'Shaughnessy — Alan Waxman - Private Credit and the Modern Financial System - [Invest Like the Best, EP.466] (April 8, 2026) · at 37:50 ▸
When this applies
when deciding whether to fix systemic misbehavior through new rules/regulation or through market consequences
The takeaway
Prefer self-correcting market discipline (withholding future capital/business from bad actors) over blanket regulation when the harmed party has direct future leverage over the offender.
Why it works
Regulation risks being the wrong guardrail, hurting competitiveness, and seeding the next crisis; a market mechanism (investors withholding future capital from poor performers) directly punishes the behavior that caused the problem without broad unintended consequences.
One level up
The best correction mechanism is one where the people harmed retain the power to withhold future resources from the offender.
Where it stops holding
This stops working when the harmed parties (e.g., retail/wealth investors) lack the sophistication or information to actually withhold capital, which is why Waxman still allows that 'there can be good legislation.'
Detail
approach: Favor institutional-investor-style discipline — don't reinvest in the next fund of a manager who behaved irresponsibly — over new legislation.
signals:
- manager changed business model to chase fees
- underwriting standards loosened to facilitate deployment
- terms given that cap upside without matching downside protection
rationale: Legislation risks wrong guardrails and competitiveness damage and could even create the next crisis; market punishment is targeted and adaptive.
In their words
The best answer is a market mechanism, like you have within institutional investors, where if you do irresponsible things or you're not a good investor, if you change your business model, they're going to punish you by not giving you money for your next fund.
'Face the tiger' — confront accelerating change directly rather than avoiding it
Source
Invest Like the Best with Patrick O'Shaughnessy — Alan Waxman - Private Credit and the Modern Financial System - [Invest Like the Best, EP.466] (April 8, 2026) · at 59:19 ▸
When this applies
when any team faces anxiety-inducing disruption (technological, competitive, or otherwise) and must decide whether to avoid or confront it
The takeaway
When facing an accelerating, unavoidable disruption, explicitly choose to confront it head-on collectively rather than individually worrying about or avoiding it — since avoidance doesn't change the outcome, only your readiness for it.
Why it works
Most people are wired to avoid chaos and change, which breeds anxiety and inaction; explicitly naming problems and running toward them together (rather than assigning blame or avoiding them) converts anxiety into action and keeps a team ahead of accelerating change, since the change is coming regardless of attitude.
One level up
Inevitable change should be met with proactive confrontation, because resistance changes only your preparedness, not the change itself.
Where it stops holding
This stops working when the 'tiger' is not actually inevitable or confrontable — e.g., genuinely random exogenous shocks where no amount of direct engagement changes the outcome.
Detail
approach: When problems happen, look at them head-on together instead of pointing fingers; run toward problems, not away from them.
signals:
- team anxiety about AI taking jobs
- rapidly accelerating pace of industry change
- temptation to avoid or worry rather than act
rationale: Whether we like it or not, it's going to happen... what are you going to do about it? ... we got to face the tiger.
In their words
We're going to make mistakes. We're going to have problems. But when those problems happen, instead of pointing fingers, we have just a saying from day one of our firm is that we look at the problems head on, we look at them together, and we don't run from them, we run to them, we run right at them.
Never put retail/depositor money next to principal risk-taking without matched liabilities
Source
Invest Like the Best with Patrick O'Shaughnessy — Alan Waxman - Private Credit and the Modern Financial System - [Invest Like the Best, EP.466] (April 8, 2026) · at 12:25 ▸ · at 34:58 ▸ · at 40:43 ▸
When this applies
when deciding what kind of capital (redeemable vs. locked-up) should fund an illiquid or risky activity
The takeaway
Match the liquidity profile of your liabilities to the liquidity profile of your assets; mismatches, not bad investment skill, are what cause blowups.
Why it works
A great investor making great illiquid investments can still be destroyed if the capital funding those investments can be pulled on a timeline shorter than the investments can mature — the problem is structural, not skill-based.
One level up
Structural fit between funding and deployment timelines matters more than the quality of the underlying decisions.
Where it stops holding
This stops working as a hard rule when the vehicle size is small enough or the redemption gate strict enough that liquidity demands genuinely never exceed available cash — Waxman notes narrow strategies with a 'governor' on inflows can be managed responsibly.
Detail
rule: Keep liabilities and assets well matched; avoid pairing redeemable/retail capital with illiquid risk-taking assets.
threshold: If redemption requests can exceed hard caps (e.g., the 5% quarterly redemption limit mentioned for perpetual private BDCs), the structure is mismatched.
rationale: You could be the best investor in the world... but if someone asks for your money before the investment has played out, you become a forced seller at a discount.
In their words
You could be the best investor in the world making the best illiquid investments. But if someone comes and asks for your money in a quarter when you haven't had time to actually have that investments play out the way that you underwrote it to do, you're going to be a bad investor.
Hiring filter: open-architecture thinking + committed learning
Source
Invest Like the Best with Patrick O'Shaughnessy — Alan Waxman - Private Credit and the Modern Financial System - [Invest Like the Best, EP.466] (April 8, 2026) · at 45:46 ▸
When this applies
when hiring for any role in a fast-changing environment where static skills will become obsolete
The takeaway
Select for adaptability (open-mindedness to debate/disagreement) and a demonstrated daily learning habit over current static knowledge or credentials.
Why it works
People who can 'play tennis' with ideas (debate and update even when they disagree) and who treat learning as a daily discipline adapt faster to new tools (e.g., AI/LLMs) and changing conditions, avoiding the risk of 'getting lost' as the environment accelerates.
One level up
In accelerating environments, the rate of learning matters more than the current stock of knowledge.
Where it stops holding
This stops working when the role is genuinely static and low-change, where deep specialized expertise outweighs general adaptability.
Detail
rule: Hire for (1) open-architecture / 'playing tennis' with ideas, and (2) being a committed daily learner.
threshold: Firm-wide tracked AI/LLM usage is 'off the charts', used as evidence/by-product of this hiring filter.
rationale: If you're not adaptive in this environment and you're not a learner... you have the risk of getting lost in what's happening and about to happen in a more accentuated way.
In their words
When we hire someone, we're looking for a lot of things, but two of the things that we're looking for: are they an open architecture person?