![]() One would not have thought it possible for the internet bubble of the late 1990s, the greatest boom in the history of the world, to be replaced within five years by a real estate bubble of even greater magnitude and worse stupidity. “Consider the strangeness of the American context. And in particular the unfolding housing debacle: Thiel honed in on the history of market bubbles and busts. For implicit in the essay was that Clarium was willing to wrestle, profitably, with these thorny question. “What is truly frightening about the twenty-first century is not merely that there exists a dangerous dimension to our time, but rather the unwillingness of the best and brightest to try and make any sense of this larger dimension. Thiel saw a world of “wholesale madness” and a “wildly mispriced macro context.” “How should the risk of a comprehensive collapse of the world economic and political system factor into one’s decisions?”Įven great investors, he claimed suffered from a “failure of the imagination about the possible trajectories for our world, especially regarding the radically divergent alternatives of total collapse and good globalization.” Thiel argued that macro investors failed to consider the “central question”: “There are no good investments in a twenty-first century where globalization fails.” If however it failed, the consequences were too dire for investors to consider. If it prevailed, bubbles such as the dot-com mania could be viewed not as exuberance but as moments of “unprecedented clarity” when investors could see the farthest. ![]() This trend would ultimately either usher in a new age or fail. Major bubbles, he argued, were driven by globalization (a meta theme used for an increase in trade, communication, and transportation everything from railroads to cars, radios, and the South Sea bubble). There would be nothing left to buy or sell.” Investors systematically discounted left tail scenarios because if the world came to an end, “all the money in the world would prove of no value. Modern markets failed to consider the apocalyptic dimension, scenarios such as nuclear war and the collapse of capitalism. Investors, Thiel argued, were “eerily complacent.” Their thinking was “rooted in the nineteenth century, when the march of History and Progress were more optimistic and certain.” By mid-2008, it managed an astonishing $6.4 billion and was reportedly up some 58% on the year.Įarlier that year, Thiel had published a lengthy essay titled The Optimistic Thought Experiment. By 2006, this had turned into a cumulative return of 230%. By 2004, it managed $260 million and was up 125% from inception. After the sale of Paypal to Ebay in 2002, Thiel returned to his passion.Ĭlarium started strong out of the gate. Thiel had started his foray into hedge funds before investing in and joining Confinity which later became Paypal. However, for nearly a decade he was actively trading global macro with his hedge fund Clarium Capital. ![]() Peter Thiel is known as a venture capitalist, co-founder of Paypal, and for his controversial politics.
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