Shervin Pishevar is unknown to most Americans outside of the elite tech scene. However, to those around the San Francisco Bay area, Shervin Pishevar is something of a living legend. The serial entrepreneur has been a key figure behind some of the biggest names in tech. He was an early investor in Uber and Airbnb. He is also the founder and CEO of An investing firm, one of the most important tech-focused venture capital firms in America.
Recently, Shervin Pishevar took to Twitter in a thought-provoking series of tweets on everything from the economy to the future of Silicon Valley. One of the themes of his tweets is the current overvaluation of U.S. stocks. Shervin Pishevar believes that, contrary to statements from the Federal Reserve, inflation has been rampant since 2009. Rather than being reflected in the CPI, the majority of inflation has occurred in assets, specifically, in equities.
Shervin Pishevar believes that this has led to a dramatically overinflated stock market. With current Shiller P/E ratios hovering around near-record highs of 33, stocks are objectively overvalued by any historic measure. Pishevar believes that this is a direct consequence of the extremely cheap money brought about by the Federal Reserve’s zero interest rate policy as well as its deliberate suppression of bond yields through its quantitative easing programs.
Pishevar foresees a 6,000-point drop in the Dow Jones Industrial Average throughout the coming months, a crash that would seriously shake the country. Pishevar sees interest rates as having nowhere to go but up. This will cause a dramatic decline in the amount of money currently invested by corporations, who have largely spent the last decade using cheap or free money to buy back their own shares. If corporations are suddenly forced to liquidate their stock holdings due to the cheap-money pool drying up, Pishevar’s vision of a dramatic decline in equity values is almost certain to become a reality.
Pishevar is also highly skeptical of the Trump Administration’s tax cuts. He sees big trouble ahead if significant revenues are not raised elsewhere and government deficits continue unabated. This, he says, could potentially lead to dangerous overreactions by the Fed, risking hyperinflation.