Shervin Pishevar is one of the country’s most important tech-focused venture capitalists. After having spent a lifetime developing new technologies, including the WebOS, Ionside and the Social Gaming Network, he founded his own venture capital firm, An investing firm. There, he was instrumental in providing the early rounds of financing that allowed such legendary companies as Uber and Airbnb to get their start.
Recently, Shirven Pishevar engaged in a 21-hour tweet storm that has caused some degree of controversy. Although his remarks were as curt as one might expect from 280 characters, his points nonetheless resonate with people following areas of tech consolidation and national finance.
One of the topics that Shervin Pishevar hit on was the overvaluation of the stock market. The Dow Jones Industrial Average is currently trading at near historically high valuations. This, says Pishevar, is largely the product of the Fed’s loose monetary policy and the resulting cheap interest rates. For the last decade, corporations have been using their access to extremely cheap money, borrowing in order to buy back shares of their own stocks. This has led to a considerably overheated equities market, with the Dow Jones Industrial stocks currently trading at a Schiller P/E Ratio of 33, close to a record.
But Shervin Pishevar warns that all asset classes, including bonds and real estate, are similarly overheated. Bond yields have been pushed through the floor as a result of massive quantitative easing programs carried out by the Fed, which have led to record assets on the central bank’s balance sheet of over $2 trillion.
At the same time, cheap credit has dramatically expanded mortgage lending. This has been made possible through banks’ reserves swelling to near record levels as the result of Federal Reserve policies. Pishevar also worries that even holding cash may not be safe as the increasing debt load of the U.S. government may prompt the Federal Reserve to initiate seriously expansionary monetary policy in the future.
Shervin Pishevar believes that the United States has no choice but to reduce both public and private debt in order to avoid a crash across all asset classes.