The classic distressed debt strategy is broken. Market dislocation windows are now incredibly narrow, often lasting just days. Furthermore, low interest rates for the past decade eliminated the ability to earn meaningful carry on discounted debt. This has forced distressed funds to rebrand as 'capital solutions' and focus on private, structured deals.

Strong, cash-rich businesses often become unfocused and bloated, tolerating poor decisions that would bankrupt lesser firms. ValueAct Capital calls this the 'disease of abundance,' which they aim to cure by refocusing management on core strengths.

Instead of simply holding Bitcoin, MicroStrategy layered on complex debt instruments like preferred stock. This convolution made it difficult for investors to understand the true risk and preference stack, contributing to the stock trading at a discount to its own assets when sentiment turned. Simplicity is safer.

Conventional definitions of risk, like volatility, are flawed. True risk is an event you did not anticipate that forces you to abandon your strategy at a bad time. Foreseeable events, like a 50% market crash, are not risks but rather expected parts of the market cycle that a robust strategy should be built to withstand.

Investors fixate on Japan's high sovereign debt. However, Wagner points out that the central bank owns a large portion. More importantly, the corporate and household sectors are net cash positive, making the overall economy far less levered than the single headline number suggests.

The feeling that today's economy is uniquely precarious is misleading. While recessions and inflation have always existed, the 24/7 news cycle creates an unprecedented intensity of negative information, leading to paralysis. The solution is to manage information consumption and focus on long-term strategy.

Rapidly scaling companies can have fantastic unit economics but face constant insolvency risk. The cash required for advance hiring and inventory means you're perpetually on the edge of collapse, even while growing revenue by triple digits. You are going out of business every day.

Jeff Aronson reframes "distressed-for-control" as a private equity strategy, not a credit one. While a traditional LBO uses leverage to acquire a company, a distressed-for-control transaction achieves the same end—ownership—by deleveraging the company through a debt-to-equity conversion. The mechanism differs, but the outcome is identical.

A credit investor's true edge lies not in understanding a company's operations, but in mastering the right-hand side of the balance sheet. This includes legal structures, credit agreements, and bankruptcy processes. Private equity investors, who are owners, will always have superior knowledge of the business itself (the left-hand side).