26 Feb 2026 The Quad God, Blue Owl Capital, and the Cost of Potential
If you are like many of us in the Beacon office, you have been enjoying the Winter Olympics over the last few weeks. Whether it was bobsledding, speed skating, or one of the many other thrilling events to watch, there was plenty going on in Milan Cortina.
One of the big stories of the Olympics, outside of the United States winning their first gold in hockey since 1980, was Ilia Malinin. Nicknamed the “Quad God” for being the first skater to land a quadruple axel in a performance, the twenty-one-year-old from Virginia was presented with enormous expectations. Before his first skate, many people were pondering how many gold medals he’d win, not if he would.
Unfortunately, when the time came to prove he was worthy of his nickname, he had a very rough free skate in the men’s final where he fell multiple times and finished in 8th.
Ilia went from the potential to be one of the best figure skaters ever to not even on the podium in a matter of minutes. It is a hard performance to watch and listen to because the announcers were stunned. Similar to a candidate not writing a concession speech, they didn’t know how to process what they saw.
During an interview on the TODAY Show, Ilia was transparent after the fact with how the expectations got to him: “The most honest way to say it is it’s just a lot of pressure on you, just so many eyes, so much attention. It really can get to you if you’re not ready to fully embrace it.” His experience is not a unique one in the sports world. It also isn’t unique in the investing world.
Over the past few years, private credit funds have become one of the most popular alternative investment vehicles. The idea is straightforward: these funds make money by acting as intermediaries between companies seeking capital and investors seeking higher returns.
Back in August, VanEck had an article entitled Why Everyone’s Talking About Private Credit in 2025. They sum up the sales pitch by saying “amid volatile markets, evolving trade dynamics, and investors’ growing appetite for alternative income, private credit offers something rare: the potential for attractive risk-adjusted returns and yield.”
Based on the potential for return, many investors have piled into these funds.
This week, however, Blue Owl Capital announced it would restrict redemptions from one of its funds due to their own lack of liquidity. Their lack of liquidity became their investors’ lack of liquidity. As one of the most recognizable names in private credit, the move sent ripples through the broader space. Since last August, many of the funds in the space are down 20%+. Blue Owl in particular is down almost 50%, at a time when the broader equity market has posted double digit gains.
What changed?
As Matt Levine recently wrote about the topic, “a year ago, private credit was a huge growth story; now that story has been called into question.”
At first glance, an Olympic figure skater and a private credit fund seem to have little in common. But at the core of both situations is what I would call the cost of potential.
Potential is tantalizing. It drives headlines. It captures attention and leads to feature stories. It attracts capital. When potential and expectations rise, so do valuations, whether for an athlete’s performance or a fund’s growth prospects. But potential can cut the other way as well.
When outcomes fail to match expectations, the reversal can be swift and severe. The same crowd that celebrates upside can quickly reassess risk. In markets, this reassessment shows up in falling prices, restricted liquidity, and renewed scrutiny.
At the end of Ilia’s performance, the announcer remarked that “a reminder that nothing is certain in sports. There’s no such thing as inevitable.” The same could be said for investing. There is no guaranteed strategy or one investment class that will be the one forever.
That is why at Beacon we believe in investing in broadly diversified portfolios. Diversification is not about finding the next “Quad God,” but about acknowledging uncertainty and not relying on a single narrative. The cost of potential is real. Ilia will not be the last athlete crowned too early. Private credit funds will not be the last investment theme to surge and then stumble.
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