Why Stocks Sometimes Fall for No Obvious Reason
A look at the hidden role of private markets in public stock volatility.
You’ve probably noticed it before: The stock market drops sharply, and the financial news scrambles to explain why. No major earnings misses. No economic disaster. No obvious catalyst. Yet, your portfolio is down significantly.
A February 2026 paper by Clemens Struck—“Private Asset Distress and Public Market Volatility“—offers a compelling explanation for exactly this kind of mystery. The short version: What happens in the vast, hidden world of private assets often shows up first and most painfully in your stock portfolio.
The Private World Overshadows the Stock Market
Most investors think of “the market” as stocks and bonds. But publicly traded equities are actually a fairly small slice of total global wealth. Private assets—real estate, private equity, private businesses, farmland, infrastructure—are roughly 10 times larger than the entire public stock market (about $67 trillion in value versus several hundred trillion dollars).
And here’s the critical detail: Most of those private assets are heavily borrowed against. Private equity buyouts routinely carry debt loads of 4 to 6 times their annual earnings. Commercial real estate is typically financed at 60% to 75% loan/value. That leverage is mostly locked in—it can’t be quickly adjusted when times get tough.
Says Struck, “The combination of illiquidity and leverage means that the household’s equity stake in privately held assets—the residual claim after debt service—is highly sensitive to fluctuations in privately held sector cash flows.”
What Happens When Private Assets Get Into Trouble
You can read the rest of my Morningstar article here.