"Nothing is forever": Why investors must respect risk in a hot market

This interview was filmed 16 October, 2025.

The Greek myth of Icarus tells the story of a young man who soared too close to the sun on wings made of feathers and wax. It's a timeless warning about the dangers of hubris.

But there’s a lesser-known part of the story. Before taking flight, his father Daedalus urged him to fly the middle path - not too high, not too low.

For Paul Miron, co-founder of Msquared Capital, it’s a fitting metaphor for today’s markets.

“I've never seen gold at record prices, the share market, property, and nearly every other asset class all up at once. This amount of liquidity we're seeing in the marketplace, I've never seen before.”

It’s a heady time, and one that Miron says is ripe for both opportunity and risk.

In this interview, he draws parallels between the myth and the current investing landscape, exploring the realities of private credit, the risks investors often overlook, and where genuine value still exists.

Perception vs reality

With investors lining up to buy physical gold and equity markets sitting at all-time highs, Miron says the surface strength belies a more fragile reality.

“If you look underneath the surface, businesses are not making record profits. In the last reporting season, only one in five companies matched what they were forecasting. Households are still feeling the pinch of the cost of living and finding it harder to service their mortgages.

“So when you talk about reality and perception - as prices are going up - maybe things are not as good as people think they are.”

At the same time, private credit is booming. Miron notes the asset class is growing globally at more than 20% a year.

Two sides of the same coin

In such a bullish environment, it’s worth asking: what’s driving the rush into private credit and are investors truly aware of the risks they’re taking on?

Miron says demand is coming from both sides of the equation.

On one side are borrowers looking for alternative forms of finance in niches the banks won’t or can’t serve. On the other are investors chasing income.

“With so many people in their retirement stage of life, income becomes a huge part of one’s portfolio,” Miron says.

As concentration risk grows in equities and traditional financing models face structural hurdles, alternatives like private credit have surged in popularity. But that doesn’t mean investors fully understand what they’re buying.

"Equity-like risks for debt-like returns"

Many investors, Miron warns, approach private credit through the lens of an equity investor.

“The logic is, if I'm getting a 10% return, why do I need to have the downside risk of the market? But the two couldn’t be more different.”

“When you're looking at equity, you're looking at upside — you're banking on that share or portfolio growing. When you're doing private credit, it's the opposite. It's the asymmetric risk.”

The key question for a lender, he says, is not about performance; it’s about protection.

“When I look at debt, the number one concern for me is if everything goes pear-shaped, can I recover the capital and interest for my investors? And if I can't say a hundred percent with certainty that I can do that, I shouldn’t be doing the loan.”

That difference, Miron stresses, is crucial for investors to grasp.

Miron says the flood of capital into private credit has created a new kind of risk: investors being drawn in by “equity-like risks and debt-like returns” without understanding what they’re exposed to.

“How do you know that your fund manager or the private credit that you're invested in isn't taking a higher level of risk?”

That question is especially relevant given much of the sector sits outside the regulatory perimeter. Miron points to a recent ASIC report on risk disclosure in private credit, which found that up to 60% of private credit exposure is in speculative, high-risk construction loans.

He offers a stark example:

“Let's say a bank will only do a 70% loan against a construction deal. If there's a lot of pressure in private credit, private lenders could end up doing 100% loan-to-value on construction loans. Is that good? No. But whose responsibility is that? 

It’s for the investor to really understand: are they getting a good return, and is it appropriately risked for that particular opportunity?”

In short, buyer beware.

Opportunities in a booming sector

Despite the risks, Miron believes there are still attractive lending opportunities, particularly as rate cuts and non-bank lending trends gather pace.

For Msquared Capital, that means staying disciplined.

“Our niche lies in short-term loans that offer the best risk and reward. That means being the majority in first mortgages in blue-chip areas, being quite conservative in relation to construction, and staying away from anything specialised or rural.”

Their approach is grounded in strict criteria.

“We look at behaviour. There has to be a good commercial reason for someone to borrow money through us. Then we look at the security. And because we are so well-defined in relation to what we can’t do, that falls into a very interesting bracket of what we can.”

Where private credit fits in a portfolio

For income-focused investors, Miron cautions against overexposure.

“Private credit shouldn't be a hundred percent of anyone's portfolio,” he says. “Between 5–20% is a good balance, depending on how you construct your portfolio.”

Because private credit is uncorrelated with equities, it can serve as a stabiliser.

“Putting a non-correlated asset that has a good, healthy income complements your portfolio, provides better liquidity, and a lot more certainty as well.”

The key takeaway

Miron circles back to the lesson of Icarus — finding the golden ratio in a market of extremes.

While he acknowledges there are “real gems and opportunities,” he warns against the complacency that often sets in during boom times.

“Nothing is forever. I get quite nervous when people say property will never fall, the stock market will never fall because we've got too much liquidity. These things concern me because I've gone through the cycle a number of times.”

That experience has taught him to build resilience, not rely on optimism.

“When you look at private credit…the returns that you get are not necessarily related to the risk. And because we don't have that price discovery mechanism like we have in the share market, it's up to the investor to do the research, understand, and do their own comparison.”

Like Daedalus’ warning to his son, Miron’s message is simple: don’t get too excited and know exactly what’s keeping your wings together.

Learn more

Msquared Capital provides its investors with high-quality, risk-rated returns, payable monthly, backed by property. For more information, visit their website or fund profiles below. 

Managed Fund

Msquared Mortgage Income Fund

Alternative Assets

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Managed Fund

Msquared High Yield Mortgage Income

Alternative Assets

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