Can Your Pension or Retirement Money Get Lost in the Bermuda Triangle?
With the recent and ongoing "Software Apocalypse" we may just find out!
It seems lately that every day when you read your morning paper the business section has another article about high net worth retail investors clamoring to get their money out of private credit funds. Funny because it seemed like just yesterday, retail investors were clamoring to get in on private credit funds!
The ongoing problems in private credit at first sound like only a Wall Street story, a bunch of uber wealthy investors and powerful institutions screwing each other over and taking a bath on their investments. Shit happens every decade or so.
But it’s not so simple. Wall Street has spent years funneling ordinary Americans’ long-term savings into the private-credit machine while paying themselves to live in the style of Louis XIV in the process. The Great Recession was bad, but at least the basic story was visible: lenders pushed sketchy subprime mortgages that people couldn’t repay, former homeowners being kicked to the curb while banks made a fortune until it all imploded. This time the danger is tucked inside opaque private funds and insurance vehicles marketed as safe and secure. Everyday Americans, in other words, may not realize until far too late that their financial security was quietly wired into this pending blowup.
A huge meltdown in software industry stocks, dubbed “The SaaSpocalypse,” ripped through the $1.8 trillion private credit industry last month when Anthropic released a new version of its Large Language Model (LLM) Claude, which highlighted the ease with which AI can automate software engineering.
The selloff has hit private credit hard. To get an idea of how brutal the software selloff has been, consider the popular exchange-traded fund IGV, which focuses on the software or SaaS sector. IGV began 2026 at 107.28. On February 23, it had dropped 28%. While it has recovered somewhat in March (84.85 as of March 16), the anxiety around private credit remains.
