The former chief executive of banking giant Goldman Sachs says he’s making a counterintuitive play, despite fears about sky-high valuations.
In a new CNBC interview, Lloyd Blankfein reveals that he’s loading up on hyperscaler names.
While mega-cap tech firms have massive valuations, the ex-Goldman CEO believes that they could go much higher.
“I’ll tell you what I’m doing. I’m betting with the hyperscalers. When I saw for the first time that a company costs a trillion dollars, how can anything be worth a trillion? And how could you invest in something? Because to double, it would have to be $2 trillion. Well, now we have four trillion-dollar companies.
One day, we were looking up at the sky, and we saw all those things, and we thought they were stars, and now we look back, and some of them are galaxies, and each one has 200 billion stars. We found out in the last generation that the universe is a lot bigger, and the numbers are a lot bigger than we ever could have imagined. And the human mind can’t even intuit numbers that big.
We can have $10 trillion companies. We can. There’s no limit on it.”
But Blankfein highlights that he doesn’t expect all of his investments to pay off.
“I’m betting that the technology and investments that are being made are largely worthwhile, knowing that they all won’t succeed. Some of the strategies will not bear out, and some of the strategies that do bear out will have participants.”
As for retail investors, the ex-Goldman boss says they should focus more on diversifying their holdings rather than concentrating their portfolio in risky bets.
“Retail investors should buy baskets of stocks. That’s what they should do. They should buy a diversified portfolio and not try to pick individual stocks, and they should go out and do what they should do. They should work in the industry, sell cars and pursue their careers in any way they could. And with their investment dollars, they should have a diversified portfolio.
And depending on what stage of life you’re at and how much of and how and whether you can afford to lose money, they should be in more risky assets that give you rewards. And if they’re near the end of their working career, they should be in less liquid, less risky things like fixed income.”
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