In The Unwinding, Packer profiles Silicon Valley's unwinding through several characters. One is Peter Thiel, a co-founder of PayPal and an early investor in what was called "Thefacebook." Thiel started a hedge fund called Clarium Capital and his initial investment in Thefacebook gave him a 10.2% stake that was later worth $1.5 billion. Thiel went on to provide seed funding to tech firms such as Palantir (to combat fraud by Russian gangsters) and continued to build up wealth, with his fund hitting a market value of $8 billion in 2008.
Then, the unwinding hit. It didn't help that Thiel had a $6.5 million mansion in San Francisco and a $27 million oceanfront spread on Maui. He became more active in his hedge fund, going long as the market tanked, shorting stocks that subsequently rose. Ultimately, his hedge fund's assets were down from $8 billion to $350 million, a colossal loss signifying a rare failure from such a bright star in the technological landscape. That represents an almost 96% loss in three years. Those of us in an S&P index fund only suffered a 7% loss in that timeframe, and, by buying and holding through all the unwinding, are now up nearly 43% compared with 2007 (before the Great Recession).
Then, the unwinding hit. It didn't help that Thiel had a $6.5 million mansion in San Francisco and a $27 million oceanfront spread on Maui. He became more active in his hedge fund, going long as the market tanked, shorting stocks that subsequently rose. Ultimately, his hedge fund's assets were down from $8 billion to $350 million, a colossal loss signifying a rare failure from such a bright star in the technological landscape. That represents an almost 96% loss in three years. Those of us in an S&P index fund only suffered a 7% loss in that timeframe, and, by buying and holding through all the unwinding, are now up nearly 43% compared with 2007 (before the Great Recession).
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