For a little background on Peter Thiel, first read this.
Among the observations Peter Thiel made yesterday on Bloomberg TV:
- He is short term cautious on oil, and long term bullish.
- It appears to him that more speculation was involved in the recent rise in oil prices, thus there may be more of a pullback than there was after November [the time of the last rise]. He expects a pullback of a few months. He would be surprised if we were to go back to new highs right away. Anecdotally, he observed oil is also mentioned in the media more and attracting attention via items like the Goldman Sachs report.
- He suggested oil prices are also partially a function of the US dollar. As the dollar strengthens, it tends to put a lid on oil prices. As the dollar has stabilized recently, oil prices have cooled off, which he believes will generally continue.
- He continues to view the Canadian oil sands stocks as the equivalent of long dated options on oil prices, which he believes will go higher.
- On housing - he argued that there is a housing bubble in progress, based on the prices and the argument of 'there is no risk involved, prices are only going to rise, demographics are on our side for the long term' that people are using. He noted that many of these arguments were used in Japan right before their real estate bubble burst, after which prices have fallen there for 13 years. He noted that when you compare the costs of buying vrs renting, housing prices appear unstable.
- On China - he believes they are also in a growth/investment bubble, which will probably deflate when the US housing bubble bursts. This will probably be kicked off by higher interest rates.
- On Internet stocks - he believes they are currently overvalued and would stay away. If forced to choose one name, he would pick Google. He is actually bullish long term as he believes the Internet growth trends will continue for many years, but at these prices he would stay away. "Great businesses, big challenges."
- Suggests the best rule is to avoid losing money, and since you cannot time the end of a bubble, he therefore he recommends owning no reits, no homebuilders, not buying a house at the current time if you don't have to, avoiding China stocks and Internet stocks.
[Not from Peter Thiel, but for reasons why oil prices might cool off, read "Oil demand on wane, says think tank."]