By Geoff Colvin, senior editor-at-large
FORTUNE -- In a global investment bazaar, where's the best place to invest right now?
Depends on who you are, as three recent responses to that question make clear.
I asked David Rubenstein, co-founder and co-CEO of the giant Carlyle Group (CG) private equity firm (assets under management: $180 billion), where he's looking to buy companies now. He answered immediately and enthusiastically: "The greatest market in the world, without doubt, is still the United States. Because of the rule of law, the transparency, the quality of the managers, the quality of the financing, the opportunities to exit, the United States, despite its 2.2% growth and despite the inefficiencies of Congress, let's say -- there's no doubt that it's still the best place to invest."
A few days later I asked about 100 CFOs from major corporations where they were finding their greatest growth opportunities. Using an audience response system, they were given a menu of nine countries. Their No. 1 choice by a mile was the U.S., named by 44% of them; China was No. 2 with just 8%.
Not long after that I was talking with Rob Arnott, famed investment researcher and strategist. Would he buy U.S. stocks at today's prices? Absolutely not, he said. What looks better? Stocks in emerging markets, he answered; an overall index of them, weighted by fundamental measures like revenue and cash flow, not by market cap, is priced well below long-term multiples. They're a bargain, he argues.
Can all these smart people be right? I think they can be and are. The key is to remember that Carlyle and major corporations aren't investors like you and me. When Carlyle buys a company, it controls the managers. When a big corporation builds a new facility or launches a new product, it obviously controls the whole process. In light of the many U.S. advantages that Rubenstein details, it makes sense that he and the CFOs see the world as they do. While their bets won't all be winners, they'd rather play the game in the U.S.
But when you and I invest in stocks, we're just going along for the ride, and research shows overwhelmingly that we shouldn't even try to pick winners and losers; we should buy the whole market, or not. That's why Arnott is also right. Buying the U.S. market at today's prices will likely produce paltry returns over the next decade.
The U.S. is the world's greatest business environment. But just as a great company can be a bad investment if it's priced too high, so can a great country. We individual investors need to find cheaper markets.
Do private equity firms need to make a structural change?
FORTUNE -- Private equity funds have long featured "hurdle rates," or preferred returns that funds must generate for investors before fund managers get to begin sharing in the profits (i.e., carried interest). But one senior private equity executive believes that current hurdle rates pose "a potential crisis" for the industry.
Jeremy Coller, founder and chief investment officer of Coller Capital, made the comments last MOREDan Primack - Mar 5, 2013 12:33 PM ET
What didn't kill private equity made it stronger.
FORTUNE -- David Rubeinstein, co-founder of The Carlyle Group (CG), believes that the private equity industry is stronger today than before the Great Recession.
Speaking at the SuperReturn International conference in Berlin, Rubenstein argued that private equity faced several serious threats in the wake of the Lehman Brothers collapse. Not only massive decreases in fundraising and deal-making, but also the possibilities of debilitating regulation, MOREDan Primack - Feb 27, 2013 3:48 AM ET
Where the global private equity firm fears to tread.
FORTUNE -- The Carlyle Group (CG) is bearish toward private equity investments in Russia and Mexico, according to comments made by firm co-founder David Rubenstein during a NY Times Dealbook conference.
"We think Russia may be attractive to visit as a tourist, but it's very difficult to make a lot of money there -- few private equity investors have... We think Mexico has MOREDan Primack - Dec 12, 2012 2:30 PM ET
Carlyle's Rubenstein sets some private equity parameters.
FORTUNE -- Not too long ago, it seemed that every private equity firm was jockeying to raise the largest fund. Today, however, the official line is that small(er) is beautiful.
For example, check out this recent comment from The Carlyle Group's (CG) David Rubenstein, during the firm's third quarter earnings call.
"The biggest complication in the fundraising market for private equity has been the mega funds and, MOREDan Primack - Nov 13, 2012 11:55 AM ET
David Rubenstein sounds optimistic.
FORTUNE -- Yesterday I wrote an obituary for "uncertainty," the catch-all excuse used by CEOs who have chosen to hoard cash rather than spend it on new employees, acquisitions or other expansion activities.
Since then, some folks have emailed to let me know that I'm "an idiot." And "stupid." And (my favorite) "someone who knows less about business than my son, who won't be born for another month."
But MOREDan Primack - Nov 8, 2012 4:24 PM ET
Private equity remains attractive, despite lower return expectations.
FORTUNE -- David Rubenstein, co-founder of The Carlyle Group (CG), said during an earnings call today that private equity investors have lower return expectations today than they have over the past three decades. Nonetheless, fundraising itself is on a mild upswing.
"People used to expect 20% net internal rates of return (IRRs) or higher," Rubenstein said, citing factors like better GDP growth and less MOREDan Primack - Aug 8, 2012 12:22 PM ET
Private equity big talks job creation.
Private equity must do a much better job tracking and conveying its job creation record, said Carlyle Group co-founder David Rubenstein during a keynote speech today at the SuperReturn International conference in Berlin.
Rubenstein's comments were made in the context of increased public scrutiny on private equity, due to the presidential ambitions of former Bain Capital chief executive Mitt Romney. Romney has regularly claimed to have MOREDan Primack - Feb 28, 2012 5:20 AM ET
Carlyle Group boss David Rubenstein was on stage in New York yesterday, as part of the Buyouts New York event. As part of the (mostly softball) interview, Rubenstein noted that he feels more welcome in China as a private equity exec than he does in Washington. As Rubenstein put it:
"If Mao Zedong and Richard Nixon came back from the dead, they wouldn't recognize their respective capitals because one has become very MOREDan Primack - Apr 27, 2011 10:14 AM ET
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