“‘Bitcoin, I call it a tumor. Real estate is another tumor. People have this notion that markets should behave the way they think they should behave. When you look at markets they swing from overvalue to undervalue.’”
— Nassim Taleb
Investors may appreciate easy-money monetary policy for the lift it has given markets since the start of the pandemic in particular, but Nassim Taleb, risk-management guru and author of “The Black Swan,” doesn’t think it has done them any favors.
In a freewheeling interview with CNBC’s “Squawk Box” on Thursday, Taleb said that the Federal Reserve’s decision to keep monetary policy so easy for so long until recently has created some “tumors” in the markets. It may also have misled a generation of investors into overestimating the ease of making a living picking stocks.
He named bitcoin
as one of those “tumors.” He mentioned real estate, too, possibly in reference to Starwood Capital CEO Barry Sternlicht, who was featured on the program alongside Taleb and who recently shared some foreboding comments of his own about the real-estate market.
As the longtime investor and author explained, the current crop of market participants hasn’t really had to grapple with the implications of a recession, which may result from the interest rate increases currently being orchestrated by the Fed. It’s arguably the first time this has occurred since the 1980s.
“Now people will discover that there’s time value of money,” Taleb said, referencing a popular economic concept that explains why a dollar today is worth more than the same dollar at some…