Liquid alternatives to private equity can be created simply by buying small, cheap, and levered stocks, Nicolas Rabener writes. : The private equity industry had an abysmal outlook in 2008 and many portfolio companies were at the brink of collapse. Carlyle Capital, a listed affiliate of the US buyout giant The Carlyle Group, defaulted on its debt. Fast-forward to 2018 and such global financial crisis–related difficulties seem almost forgotten and private equity is flourishing. Indeed, alternative investment firms have $1.8 trillion in “dry powder” waiting in reserve and more than half of that is held by private equity funds.