Sosnoff: Just be careful when you hear the private markets are exploding

Market Access & Democratization - Retail investors are gaining increased access to private market investments, a trend viewed positively for optionality [1][2] - The private market's secondary marketplace is often controlled by advisories and brokerages, involving fees like a 7% upfront charge and a 15-20% profit share [6] - The speaker hopes the private marketplace becomes fully tokenized, allowing even small investors to participate [16] Cost & Fee Structure - Private market investments are not cheap, involving significant expenses, especially compared to publicly traded stocks with minimal fees or commissions [2][5] - Unlike buying a stock at $100 and profiting $10 upon selling at $110, private market investments involve upfront fees, reducing the initial investment (e.g., $93 invested from a $100 purchase) [6][7] - Profit sharing on the back end, typically between 15% and 20%, further reduces potential gains [6] Liquidity Concerns - Retail investors may find the lack of liquidity in private markets concerning, as they are less accustomed to lock-up periods compared to institutional investors [13] - Semi-liquid funds, while intended to address liquidity, may become virtually illiquid during market downturns [15] Market Growth & Risk - The private markets are projected to grow from $13 trillion in 2025 to $20 trillion in 2030 [9] - The current bull market may create a false sense of security in the private space, which has traditionally been a risky area [10][11] - Open AI has experienced a 1,000% growth in the private markets over the last three years [8]