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Chamath Palihapitiya Profile picture
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8 Apr, 4 tweets, 1 min read
The biggest risk/correlation to equity markets over the next decade has nothing to do with interest rates.

It will be carbon tariffs and it will blow up every DCF model of every company in the public markets...
Imagine a new trade war between the US and China. Or imagine an increasingly aggressive European Union fighting climate change.

The simplest solution to enact both would be a carbon tariff.
A carbon tariff would require every company to have a detailed provenance of the energy used to produce a good or service entering a border.

Love that iPhone case? It's price will depend on how much coal was burned in China to make it. More coal == more tariff == more cost.
Companies aren't prepared for this. Capital markets have no sense of it. Yet climate legislation marches forward.

We are supporters of carbon tariffs and want to help build solutions. Meanwhile, we update our models... 😬

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More from @chamath

Chamath Palihapitiya Profile picture
6 Apr
I’m not an investor in @coinbase. I totally missed it. That said, I also got really lucky because many years earlier, I invested as an LP with an investor who owns a large stake.

What did I get wrong?
What did he get right?
They were investors in BTC with me but I didn’t get his incremental decision. I remember them talking to me about it and I was skeptical. My logic was that there was better convexity in Bitcoin itself.

“Why own the exchange when you can own the currency itself?”
As it turned out, there was an important secret hiding in plain sight:

Bitcoin was the first asset where you could own the protocol AND the companies built on top of it.

This unique feature is still poorly understood in crypto-land.
Read 5 tweets
Chamath Palihapitiya Profile picture
29 Mar
A quick recap of what's happened since early March highs in tech markets:

1. Fears of inflation have driven many institutional investors to the hills. They are unwinding trades that have worked for DECADES.
2. Factor rotation out of tech and into more defensive/cyclical stocks that tend to do better during times of inflation.

3. Commodities have spiked which tend to do better during inflation

4. Bonds have puked as yields have risen as they forecast inflation.
5. $1.9T stimulus bill; potential for $3T infrastructure bill and another several trillion stimulus bill in the offing will give inflation fears more juice.

6. Pensions and others are going through a big rebalancing through Q1 which isn't done.
Read 5 tweets
Chamath Palihapitiya Profile picture
26 Mar
Here is something I learned today:

1. 1979 was peak inflation. It was also when the gap between rich and poor was the smallest.

2. It was preceded by a big wealth inequality b/w rich and poor like today.

3. Solution started in late 1960s with LBJs war on poverty.
4. By investing aggressively in infrastructure, social programs and an economic safety net he evened the starting line.

5. As “poor” started to earn more, they spent more, driving commodities and inflation.

6. The “rich” did less well because financial assets were worth less.
7. Gap between “rich” and “poor” closed aggressively.

8. Big realization for me is government spending leads the way not private/capital markets.

9. In last month we’ve decided to spend $1.9T + $3T!!
Read 5 tweets
Chamath Palihapitiya Profile picture
6 Mar
It’s been a super tough week for me and I’m sure a super tough week for some of you as well. Here is how I’m doing after Friday and what I’ve learned...
1. The first thing I tried to do yesterday was take a step back and try to see the bigger picture:

i) I looked at March-2020 as a guide and saw that by the end of March-2020, the markets were down 20% but still found a way to fight back. What’s the same? Different?
ii) I looked at my relative performance vs the S&P500 - 3.6% vs 2.3% = 56% above the benchmark. I’m no huge fan of being up 3.6% but right now I need to find confidence in this.

iii) I looked at my portfolio and remodeled everything I’m invested in. I’m still proud of it all.
Read 7 tweets
Chamath Palihapitiya Profile picture
1 Feb
Please meet the Social Capital Emerging Managers Class of 2021

This cohort will be focused on public US equities and their strategies range from growth, tech, value, climate, YOLO and all have 💎🙌🏽!
In November, we set out to assemble a group of smart learners, from diverse backgrounds and experiences who wanted to become full time investors.

Our goal is to teach them how we think, learn how they think and support them in becoming the next generation of managers.
From 1500 applicants, we’ve hired 11 new PMs:

• 3 women, 5 minority, 2 vets
• Boston, NYC, Charlotte, Florida, LA, Bay Area
• entrepreneurs, traders, analysts and brand strategists

They start with $50M of our capital...and AUM will increase quickly with performance.
Read 5 tweets
Chamath Palihapitiya Profile picture
28 Jan
A children's book explanation of what's happening:

1. If you are "smart money" you are allowed to take your $1 and leverage it up to $15+

2. You can now buy $15 of stock AND if you promise to short companies, you can short $15 of stock as well
3. In finance language, this means that you are $30 "gross" ($15 of longs + $15 of shorts) but $0 net (+$15 of longs -$15 of shorts). This makes everyone feel good because it feels like you are taking zero risk...but in reality, your $1 is exposed to $30 of risk.
4. Now you go around and tell your friends about both your longs and your shorts and when you do it at a restaurant vs on Reddit, its called an "ideas dinner".

5. You also publish your longs on a quarterly lag via an SEC rule. You don't have to tell anyone about your shorts.
Read 9 tweets

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