- Billionaire investor Chamath Palihapitiya said US stocks could rebound quickly after the recent massive sell-off.
- He said there was “a ton” of money waiting on the sidelines in products such as money market accounts.
- Stocks have fallen this month as the Federal Reserve prepares to raise interest rates, with the tech-heavy Nasdaq 100 index down 5.5%.
Billionaire investor Chamath Palihapitiya said stock markets could quickly rebound from last week’s massive sell-off if they follow recent trends, with trillions of dollars on the sidelines waiting to get back in.
Palihapitiya said on his All In podcast over the weekend that he believes the markets may be “puking everything up” after plummeting sharply in recent days. Stocks fell as investors began to grapple with the possibility that the Federal Reserve will raise interest rates sharply in 2022.
“There are tons and trillions of dollars waiting to be found,” Palihapitiya said. He referred to people with money market accounts and municipal bonds.
“You might see a quick dip in the first quarter [and then] We’re back at the races again, because of all that other money that’s going to say, ‘I have to come back’. “
He added, “If you look at all these corrections, in the world of computer-traded algorithms and ETFs and passive money… all snapbacks are very fast, you correct 20%, and then, yell, put it back and go.”
However, the billionaire tech investor said he wasn’t sure if the sale was a buying opportunity and that this was just “one view based on the past”.
Read more: RBC says buying these 30 high-confidence global stocks that are set to dominate the market in 2022 – including 9 that are expected to generate returns above 40% and one group of more than 200%
Stocks have fallen sharply in 2022 so far, with the S&P 500 down about 2.5% for the year. Technology stocks were the hardest hit, with the Nasdaq 100 down 5.5%.
Investors have ditched speculative tech companies as they prepare for the Federal Reserve to raise interest rates this year. Companies that are closely linked to interest rates and the health of the economy, such as financial firms and retailers, are starting to look more attractive.
Palihapitiya, a former Facebook CEO who launched several high-profile special purpose takeovers, said it appears the Fed may have waited “a very long time” to start raising interest rates to tackle severe inflation.
“We are just, kind of, internalizing that fact,” he said on his podcast, which was co-hosted with investors Jason Calacanis, David Sachs and David Friedberg. He added, “I think we … vomited everything more often, in my opinion.”
“You have to remember, the big difference between now and 10… 20, 30, 40, 50 years ago is the number of computers involved in the trade, how much passive money is in the private assets, and how much of that stuff is sitting on the sidelines still in market accounts. money and [municipal bonds]. “