Chamath Palihapitiya Mocks Critics After Profiting From S&P vs Mag7 Trade: 'It's Called Leverage'
Billionaire venture capitalist Chamath Palihapitiya took to X to share his thoughts on the stock market and offer some advice to investors.
What Happened: On Sunday, Palihapitiya posted about a trade idea he had shared on the All In Podcast in January.
He had suggested going long on the S&P Index, tracked by SPDR S&P 500 (NYSE:SPY) and shorting the “Mag7,” which he referred to as the “Mean Reversion Index Trade.” This trade turned out to be a lucrative one, according to Palihapitiya.
The "Magnificent Seven" refers to a group of seven major technology giants that have had a substantial impact on both the stock market and the broader economy. This group includes Apple Inc. (NASDAQ:AAPL), Amazon.com Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), Meta Platforms Inc. (NASDAQ:META), Microsoft Corp. (NASDAQ:MSFT), Nvidia Corp. (NASDAQ:NVDA), and Tesla Inc. (NASDAQ:TSLA).
He then followed up with another post, expressing his amusement and disappointment at the number of “unsophisticated financial ‘investors'” commenting on the thread.
He advised these individuals to use leverage, obtain an International Swaps and Derivatives Association, be banked by a prime, and put the trade on $5-10 billion a side, stating that this is how it’s done.
Why It Matters: According to Forbes, Palihapitiya has a net worth of 1.2 billion. He is a strong advocate of SPACs, which let private companies go public with fewer regulatory hurdles. He has sponsored and invested in several SPACs, including deals with Virgin Galactic and Clover Health.
In addition to backing various emerging trends early on, Palihapitiya was an early advocate of Bitcoin (CRYPTO: BTC). He revealed that he initially purchased $1 million worth of Bitcoin in 2012 based on a friend's recommendation and later increased his holdings as he gained a deeper understanding of the cryptocurrency.
He has also been unfazed by the recent decline of the U.S. dollar, indicating that he has a deep understanding of market trends and dynamics.
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Posted-In: Tech
