Shervin Pishevar says that every asset class is currently overvalued
America is heading into uncharted territory as far as its monetary and fiscal policies are concerned. The country is currently burdened with far greater debt levels, as a percentage of GDP, than it has ever had at any point in its existence. Furthermore, the U.S. government continues to face increasing costs related to its ever-expanding list of mandatory entitlement expenditures.
At the same time, the Federal Reserve has embarked on so-called open market operations at levels heretofore unseen. Shervin Pishevar, one of Silicon Valley’s most accomplished entrepreneurs, has recently taken to Twitter, warning about some of the dire implications of the country’s irresponsible spending, borrowing and money-printing habits.
One of the things that Shervin Pishevar is particularly concerned with is the high level of asset inflation that has been seen across many different markets. Shervin Pishevar says that when a true market correction finally begins, it is likely that investors will have nowhere to take shelter from the economic storm.
Normally, Shervin Pishevar argues, investors in overvalued equity markets can take shelter in bonds or even liquidate all of their holdings into cash. But Pishevar warns that the Fed’s ongoing and aggressive quantitative easing programs have left bonds and cash as options that will likely prove extremely unattractive over the long term. Pishevar explains that bond yields are currently badly depressed, making the current prospective returns from bond investment extremely low. If inflation ramps up in the future, an eventuality that Pishevar believes is likely, the ultra-low-interest bonds of today could face almost complete losses of their value.
At the same time, Pishevar believes that the woefully irresponsible fiscal policies of the U.S. government will inextricably lead to severe inflation. This will make holding cash not only a bad option, but possibly the worst one. Pishevar says that in such an environment, the only thing that investors can really do is look for more stable investment opportunities abroad. The financial storm that is currently brewing in the United States simply will not offer them any safe haven because its intensity will be unprecedented, and its coverage of every asset class will be absolute.