Billionaire investor Chamath Palihapitiya flags concerns about sky-high inflation and rampant money printing

• Chamath Palihapitiya aired concerns about soaring inflation and the Fed's money printing on Thursday.
• The billionaire tech investor admitted he's unsure about how to invest in the current climate.

Billionaire investor Chamath Palihapitiya aired concern about soaring inflation on Thursday, saying it has driven him to rethink his investments.

Palihapitiya, a former Facebook executive who runs the venture capital fund Social Capital, said in a letter posted on Twitter that "markets have been on a tear" and that "almost everything seems to be at all-time highs."

Yet the investor pointed to a number of concerns. "Inflation is also at 30-year highs," he said. "And we're printing more money than ever with talk of more stimulus on the way."

The Federal Reserve is currently injecting more than $100 billion a month into the economy through bond purchases, and Congress is thrashing out the details of major new spending programmes.

Palihapitiya said on his All In podcast at the weekend that he thinks strong inflation is here to stay, saying it will be "persistent." He argued that because huge companies such as Amazon and McDonald's are raising wages sharply, that will force other sectors to pay more too.

Palihapitiya admitted in his podcast and again in his letter that he's unsure how to approach investing in the current environment. He said in the podcast that he's "totally confused."

His thinking appears to have been influenced by Tesla CEO Elon Musk and Amazon founder Jeff Bezos, who have sold billions of dollars of stock in recent weeks.

"Two entrepreneurs who I've considered to be the smartest capital allocators of our generation are taking chips off the table," Palihapitiya wrote in the letter.

The billionaire investor added that his thinking had led him to sell 15% of his stake in fintech company SoFi, so he could build up some cash reserves and fund investments in other areas of the market that he said are "ripe for opportunity."

These new investments include Mitra Chem, a battery company, and Spectral and Syndica, two companies focused on decentralized finance and crypto, Palihapitiya said. He also expects to increase his stake in Clover Health.

SoFi listed on the Nasdaq this year after merging with one of Palihapitiya's Social Capital blank-check companies. The fintech company's stock fell 2.6% Thursday and was down around 2% in premarket trading Friday at $20.57.

Palihapitiya shot to investing fame over the last two years as he aggressively bet on special-purpose acquisition companies, earning him the nickname "SPAC King." He has become a celebrity among retail investors and is now worth $1.1 billion, according to Forbes.

He's far from the only investor who's thinking deeply about inflation, which rose to a 31-year high of 6.2% year-on-year in the US in October.

Musk has said Tesla is feeling the pinch from higher prices and supply-chain problems. Allianz chief economic adviser Mohamed El-Erian has said inflation is here to stay and that the Federal Reserve has made one of the worst judgments in its history by dismissing price rises as transitory.

Yet the US stock market has continued to march upward and keep hitting record highs. The S&P 500 has risen by 25% so far in 2021, buoyed recently by strong corporate earnings and evidence of growth in the underlying economy as it reopens.

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