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The Future According to Chamath Palihapitiya

How the Social Capital CEO sees SPACs, retail investing, and politics in the years to come.

The debate was a “dumpster fire.” Providing publicly traded companies government aid is like “giving a baby a gun.” We shouldn’t be surprised if one day, Kim Kardashian is president.  

At least, according to Chamath Palihapitiya, the chief executive officer at venture firm Social Capital. Known for his impassioned commentary — rants, some might call them — Palihapitiya spoke Wednesday at the CNBC Institutional Investor Delivering Alpha Conference, sharing his views on the future of special purpose acquisition companies, the market, and the United States. 

Palihapitiya has emerged as one of the most prolific SPAC investors in recent months, having already raised three and with three more in the works. According to Palihapitiya, before putting money to work, SPAC investors should consider three things: the fund’s due diligence, its disclosures, and how much of their own money the owners are putting on the line.   

“Those people who put more of their own money on the line tend to make better decisions than those with less,” he said.  

In his view, the SPAC market is not oversaturated. Palihapitiya noted that there were nearly double the number of publicly traded companies in 2000 compared to today.  

“We need more high growth companies to be public so you can give ordinary folks the opportunity to own things in their portfolios to replace bonds that do nothing for them,” he said.  

Much of Palihapitiya’s commentary centered on retail investors and ordinary Americans. He said he believes that the U.S. government should deliver aid to consumers and small businesses, not major corporations.  

These corporations, he added, have not invested in research and development, or set aside money for a rainy day. Instead, they’ve focused on buying back shares, pushing their own stock prices higher.  

“Giving boards and CEOs more capital when they have proven that they’re fundamentally poor capital allocators is not a smart strategy,” he said. “It’s like giving a baby a gun. It doesn’t work.” 

Palihapitiya is also a cheerleader for retail investors and independent researchers.  

“What I think has happened is that we’ve started to figure out that there’s an incredibly long tail of people that do incredible research,” Palihapitiya said. “There’s an incredible group of people online who help you make money.”    

He pointed to Tesla as an example of retail investors’ success. Institutions have shorted the company, but, according to Palihapitiya, the trade hasn’t worked. “What I love is that all of the money was made by retail investors.”   

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As for Tuesday’s presidential debate between President Donald Trump and Democratic candidate Joe Biden? “The debate was an utter shambolic dumpster fire,” he said. “It was so sad.”  

He said he believes that when it comes to politics, Americans value style over substance. That is, Americans are voting for the kind of person they want as president, rather than for the candidate’s policy proposals.  

“I want to make clear that 25 or 40 years from now, don’t be surprised if Kim Kardashian wins the presidency,” he said, pointing to the increased importance Americans place on personality.  

But, Palihapitiya said, it was also clarifying. When he woke up Wednesday morning, Palihapitiya said he checked the S&P Futures, which were up. He added that he expects the markets to continue to go higher because the impact of the presidency is being divorced from the future and prosperity of the country.   

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