Updated 9:04PM: Shervin Pishevar’s predictions keep rolling in
Shervin Pishevar took to Twitter on Tuesday to unload his thoughts on the future of the American economy along with his projections on cryptocurrencies, globalization, the bond market and other finance topics. The tirade came in the form of 50 successive tweets, each one with its own brash reason as to why he predicts an significant economic decline is on the horizon.
While the Tweet storm represents only one man’s opinion, Shervin Pershivar has proven that his opinion is a valuable one. As an angel investor and venture capitalist, he has played a hand in nurturing some of the most groundbreaking new ideas and bringing them to life. He’s personally helped to shape the startup revolution that has made the Silicon Valley the beacon of ingenuity that it is today. His presented arguments are difficult to ignore.
We’ll break down the main takeaways from his Tweets:
“I expect 6000 point drop in aggregate in months ahead”
A striking opener to his storm of Tweets, he predicts a 6,000-point drop in the stock market. According to Pishevar, the “financial storm” that’s to come could be foreseen by an increase in interest rates and national debt, as well as senate-approved tax giveaways to the rich without cutting funding elsewhere to offset the deficit. The national debt is now well over $20 trillion, which distributed over all US citizens equates to a debt of over $63K per citizen.
He also Tweeted: “The market has already given up all the gains of 2018 and will continue to give up all the gains from 2017.”
The DOW has had a tumultuous run in the last week with a sharp decline of 2.5% on Friday February 2, the highest percent decline since the Brexit vote in 2016. The market then fell another 4.6% on Monday. Markets began to recover Tuesday afternoon, but have shown that they’re no longer unwavering as they’ve been since Trump was elected in 2016.
With many major asset classes like stocks, treasuries and property overvalued at this point in time, you get the eerie feeling that almost all asset classes are in the same boat. Pishevar Tweets that no asset class is safe from the overvaluation and investors won’t find safety by simply moving their money to another market.
“Scurry and scrabble for safety that is nowhere to be found. Every asset class has proven to be overvalued.”
A declining bond market leads him to believe that the bull run of bonds has come to an end. He fears that we’ll begin to see quantitative easing if markets don’t correct themselves very soon. Quantitative easing is the introduction of new money from the Federal Reserve into the country’s current money supply in an attempt to stimulate growth. According to Pishevar, this method has “lost its edge” because it has been used so many times.
“Era of cheap money is dead. Inflation spreading, stock markets crashing, underemployment hardening into systemic economic stasis.”
As interest rates rise, “cheap money” as Pishevar calls it, becomes difficult to find. That is what he anticipates will happen as a result of the current trends that he has noticed. After steady consumer-price growth over the last few years, and even deflation in some countries, inflation has made an appearance and investors are panicking. Inflation is a nightmare to bondholders, as the value of their fixed-rate payments are filed down as inflation catches up to their interest rates.
The New York Times reports stocks being dumped by investors around the world as part of a massive sell-off trend that’s turning the stock market downward.
He even touches on the Underemployment Phenomenon, which refers to a glaring issue in the United States where overqualified, skilled, and educated people are forced to take lower-paying jobs that require little skill. Most of us can identify with this issue as we see our friends and family members unable to find work in their fields, and having no choice but to settle for a job that doesn’t allow them to utilize their education and talents.
“Gold will rise in response. Bitcoin will continue to crash but stabilize at 2-5k range and begin a more stable rise over next 24 mo’s”
Pishevar predicts that in response to the sinking stock market and rising inflation gold will rise in value. He also predicts that bitcoin will see another steady incline, but not before it plummets to the $2-5k range after it came close to $20k at the end of 2017. He seems to stand behind the plight cryptocurrency and its ability to separate itself from centralized banks to allow a global economy. Such an economy Pishevar predicts would be “perfectly efficient and frictionless”.
“A tectonic shift in has been brewing as Silicon Valley has lost some of its competitive edge against competing zones of innovation”
Pishevar made a name for himself in the Silicon Valley at the time when the area was becoming a shining hub for tech entrepreneurs, and has been instrumental in helping it maintain its luster to this day. However, he feels that the nations failure to embrace immigrant talent will lead to its demise. During the Obama administration, Pishevar worked closely with the President and provided support for passage of the Startup Visa Act.
that would allow immigrants to obtain visas so long as they were able to prove their ability to establish and maintain a business in the US. The bill did not pass after going before congress on two occasions, and Pishevar’s Tweets seem to suggest that the Silicon Valley will lose its appeal because of it.
“But while we build walls physical and culture to keep out immigrant talent that talent doesn’t need to come here anymore.”
With the tides shifting toward globalization, Pishevar recognizes the possibility, and perhaps the probability that the “Silicon Valley” which has become more of an idea than an actual place, will find a new home outside of our borders.
“As Silicon Valley monopoly on early stage has shifted abroad, its empowered 5 US monopolies: Alphabet, Amazon, Apple, Facebook, Microsoft”
Shervin Pishevar warns that the five aforementioned giants will make it nearly impossible for startups to see the light as they have been for the last several years. He compares it to the days of “Ma Bell” when the Bell Telephone Company, and then AT&T monopolized on the telephone services across most of the US. The US Justice Department had to step in to divide the companies into smaller independent ones. If what he says is true, we may not see another Uber or Airbnb for another decade or more.
Update: Shervin Pishevar’s predictions keep rolling in
Shervin Pishevar started on a 21 hour-long Twitter narrative days ago, talking about the future of the U.S. economy, the globalization of economy through cryptocurrency, and generally the sense of innovative stifling we’ve felt at the hands of giant conglomerates. He’s not done; there’s a lot more to say. He provides a link to a Bloomberg Markets article titled “Stocks Enter Correction as Rate-Hike Fears Return: Markets Wrap” and says “50 tweets warned about this.”
50 tweets warned about this. “U.S. Stocks Plunge Rate jitters return. Treasury auctions underwhelmed. Debt selloff” https://t.co/s0DvmttZ3g
— Shervin Pishevar (@shervin) February 8, 2018
Soon after, he resurfaces with
Guess I should have tweeted 51 times. Dow Jones plunges >1,000 points as volatility kept markets in its grip. https://t.co/w8Zzom1Zw0
— Shervin Pishevar (@shervin) February 8, 2018
His rate of response to the plunging market indicates his attentiveness to the matter. He’s predicted shifts like this in the economy, and here they manifest.
Perhaps he’s been capable of tracing these declinations because of his aptitude towards future projection, which has certainly helped him in business. The overarching theme of his latest stream of Tweets is the current volatility of the stock market. He says “Will go to 22,000 territory today. 19,000 territory by end of next week. Warned about this. Ramifications bigger than people are realizing.” The accompanying charts provide a frightening look at decline, and his Tweet immediately following states
$5 trillion just evaporated this week. https://t.co/rDQhvXRlGM
— Shervin Pishevar (@shervin) February 9, 2018
Shervin Pishevar appears to be tracking these trends vigorously. He implies many unsaid repercussions for the current economic news. Though he does not outline the very ramifications that he speaks of, you get a subtle sense reading his flow of Tweets that he has some ideas.
In addition to speaking on a country-wide level, Shervin also Tweets regarding a matter closer to him: “After this Uber-Waymo settlement, standardization imperative.” He links to a November 2017 article he wrote for Competition Policy International in which he discusses points on the standardization of autonomous cars. Towards the end of the article, he says: “Achieving a successful standards development process and patent pool will likely be challenging here because a number of companies in the space have been investing in self-driving technology for years, and have already developed proprietary technologies and related intellectual property in those areas. At the same time, federal or state laws and regulations, and the potential network effects provided by widely adopted standards, may provide adequate incentives for participation in the standards development process.”
This sentiment echoes some of the ideas from his original 50-Tweet stream – putting in place programs or regulations that allow for more rules around technologies that benefit the whole of the population. That is, rather than some conglomerates holding so much power that they can easily get in the way of companies and individuals that they deem a threat to their advancement. He suggests a patent pool for autonomous vehicles, but recognizes the private accomplishments of companies who have already developed self-driving technologies. At the same time, he also speaks of standards put in place so as to attribute individuals properly on patent documentation. Shervin Pishevar seems to have a lot to say, and people are taking notice. He’s tuned in and far enough away to be able to see the big picture.