Joe Speaks

Oh, hey there blog. It’s been a while. But I promise to not neglect you anymore. No, really.

Today I read a thought-provoking essay on investing, optimism and the future of globalization by a man I’ve been hearing a lot about lately — Peter Thiel.

Thiel figures prominently in The Facebook Effect, a book I’m currently reading about the rise of the now giant social network. Thiel was one of the first investors in Facebook and holds a seat on the company’s board.

In his essay, Thiel argues for optimism when investing. Because if you bet on the apocalypse and you’re right — you don’t actually “win” anything.

He vividly describes the history of globalization, past investment bubbles, and three current bubbles: “China,” “Technology,” and “Hedge Funds.” He argues that each are bets in their own way on the advance of globalization and that while each bubble (and past bubbles for that matter) were full of naive investors — the underly assumptions of each bubble were frequently sound — if overly optimistic.

I won’t rehash Thiel’s essay. Go and read it. Instead, I’ll pull out a few nuggets that struck me.

Globalization’s History

People often say our current globalized society is unprecedented. But this is not so. Modern history is a continuous cycle of global boom, followed by bust. As Thiel says, ”we stand at a level of globalization that compares with the previous peak year of 1913.” The following year brought the cataclysm of World War I, destroying the global economy of the day.

Globalization’s forward march is clearly not preordained.

Technology Security

Thiel sees tremendous opportunity for growth in technology security for our digital era. Seen from that light, Intel’s acquisition of McAfee is quite wise.

The Way Forward

As is so often the case, Thiel argues for the middle path:

For the policymaker as for the investor, the challenge is to find a way between the Scylla of outdated wisdom and the Charybdis of nihilistic cleverness.

But walking the narrow, middle path is never easy.