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Billionaire Chamath Palihapitiya sees US stocks rebounding rapidly as trillions of dollars rush back in from the sidelines


Chamath Palihapitiya
Chamath Palihapitiya is a billionaire tech investor.

  • Billionaire investor Chamath Palihapitiya said US stocks could rebound rapidly after the recent sell-off.
  • He said there’s “a ton” of money waiting on the sidelines in products such as money market accounts.
  • Stocks have tumbled this month as the Fed prepares to raise rates, with the tech-heavy Nasdaq 100 down 5.5%.

Billionaire investor Chamath Palihapitiya has said stock markets could bounce back rapidly from last week’s dramatic sell-off if they follow recent trends, with trillions of dollars sitting on the sidelines waiting to jump back in.

Palihapitiya said in his All In podcast at the weekend that he thinks markets have likely “puked it all out” after falling sharply in recent days. Stocks have dropped as investors come to grips with the likelihood that the Federal Reserve hikes interest rates sharply in 2022.

“There is a ton, trillions of dollars, waiting to find a home,” Palihapitiya said. He pointed to people holding money market accounts and municipal bonds.

“You may see a quick pullback in Q1 [and then] we’re back to the races again, because of all this other money that’s gonna say, ‘I gotta get back in’.”

He added: “If you look at all these corrections, in the world of computer-traded algorithms and ETFs and passive money… all the snapbacks are so fast, you correct 20% and then, whoop, you whip it back and you go.”

However, the billionaire tech investor said he wasn’t sure whether the sell-off was a buying opportunity and that this was just “one view based on the past.”

Read more: RBC says buy these 30 high-conviction global stocks that are set to dominate the market in 2022 — including 9 stocks expected to provide returns above 40% and 1 set to surge over 200%

Stocks have fallen sharply in 2022 so far, with the S&P 500 down around 2.5% for the year. Tech stocks have been the hardest hit, with the Nasdaq 100 down 5.5%.

Investors have dumped speculative technology companies as they prepare for the Fed to raise interest rates this year. Companies that are more closely linked to interest rates and the health of the economy, such as financials and retailers, have started to look more attractive.

Palihapitiya, a former Facebook executive who has launched many high profile special-purpose acquisition companies, said it seemed like the Fed has probably waited “a little too long” to start raising interest rates to tackle red-hot inflation.

“We’re just, sort of, digesting that reality,” he said on his podcast, co-hosted with investors Jason Calacanis, David Sacks and David Friedberg. “I think that… we puked it all out for the most part, in my opinion,” he added.

“You have to remember, the big difference between now and even 10… 20, 30, 40, 50 years ago is how many computers are involved in the trade, how much passive money is involved that own assets, and how much of this stuff is sitting on the sidelines still in money market accounts and [municipal bonds].”

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