Wednesday, April 13, 2016

VC Peter Thiel Says Just About Everything Is Overvalued, Not Just Tech

Peter Thiel, the venture capitalist who co-founded PayPal and was the first outside investor in Facebook, doesn’t think the technology sector is in a bubble, but he’s looking to diversify some investments anyway, reports Bloomberg.

“Startup tech stocks may be overvalued, but so are public equities, so are houses, so are government bonds,” said Thiel, speaking Tuesday at the LendIt USA Conference in San Francisco. “Silicon Valley is quite far from it. If the bubble is in cash, illiquid startup investments may be a place to hide.”

Thiel is correct when he says the US is in a broad-based bubble. The economy, thanks to Fed money pumping, is in a major boom phase. But Thiel is wrong to think the technology sector is not in a bubble phase and it is positively insane to think  illiquid startup investments are a safe investment for when the overall bubble burts.

To the degree there is a "bubble in cash," you protect yourself by holding assets such as gold and silver that will perform well during any flight from cash.

When the Fed-induced capital flow bubble bursts, though, the last place you want to be is in an illiquid Silicon Valley startup-----that is all about Fed money pumping.


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