Bloomberg Profiles Peter Thiel (of PayPal and Clarium Fame)

Great Bloomberg profile of Peter Thiel, an early investor in PayPal, and manager of a highly successful hedge fund, Clarium Capital. Thiel has had a great run, as Bloomberg’s writer points out, with more successes before the age of 40 than the average Yale graduating class pulls off over its cumulative career.

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Comments

  1. Thiel’s alter ego at Clarium is a physicist named Kevin Harrington, who used to do mathematical research for the U.S. Department of Defense. The two sometimes talk strategy for five hours at a stretch.
    “Peter is my foil, and I’m his foil,” Harrington, 37, says.
    `Petrodollar Illusion’
    Harrington says the U.S. economy and American stocks are headed for a fall. In September, he worked 36 hours straight completing a 21-page report entitled “The Petrodollar Illusion,” which lays out his case.
    According to Harrington, a deluge of money from oil-producing countries such as Saudi Arabia and Iran has propped up the U.S. economy and financial markets. As the price of a barrel of crude climbed to a record $78.40 last July from $25 in 2003, about $50 trillion worth of petrodollars flooded into the U.S. That money has artificially boosted U.S. stocks and spurred subprime mortgage lending. The results are overvalued U.S. stock and housing markets.
    At some point — Thiel and his team are still debating when — the petrodollar illusion will vanish. When that happens, the housing market bubble will burst, equity markets will collapse and the U.S. economy will sink into a deflationary funk.
    What you think about this Paul. Any comments.

  2. I posted on this a while back, and I agree, in large part, with Thiel’s petrodollar argument. A slumping technology asset class led to investment dollars flowing elsewhere, largely real estate and commodities, the largest beneficiary of which was petroleum. The outsized gains in the latter asset has led to a massive inflow of investment dollars, as well as concentrated re-investable gains from oil exporters, as is clear if you read the McKinsey’s recent profile of Saudi investor Prince Alwaleed.

  3. John says:

    Assuming that domestic equities as an asset class are worth about $25T (not exact, but close enough) this year and that domestic real-estate has increased by about $10T in the last 10 years, I guess I have trouble seeing where $50T went? Can someone explain this to me. Thanks!

  4. Hiten Patel says:

    As long as the oil is there and it keeps our transport sector running cheaply we can expect the foreign oil nations investors to be happy and content investing in the USA, making our tangible assets valuable. When the prices of oil go up and no substitute to oil is available who will control our businesses indirectly will be of interest to us as most of them will be held by foreigners. We hope that they remain friendly to the US and our political system of democracy is what they seek. What will happen after that seems to be a complex question as politics and business are inter-related intricately like a spider’s web.

  5. Richard Wicks says:

    “As long as the oil is there and it keeps our transport sector running cheaply we can expect the foreign oil nations investors to be happy and content investing in the USA, making our tangible assets valuable.”
    Although this seems like a nice cozy scenario that benefits everybody it ignores a vital point.
    Americans won’t be able to afford to purchase tangible assets that are valuable. The more US dollars that foreigners have, the poor Americans will be.