If this isn't an efficient allocation of resources by a free market system then I don't know what is. Not that the current system doesn't have plenty of problems and challenges to solve, but here is the single most productive and futuristic capital allocator in modern times. Imagine seizing his assets and distributing it to the people via a wealth tax. That would be great for a few months of welfare and terrible for the future.
Do you think that he wouldn't have done what he has done if there was a wealth tax in the US? Do you think he can put money to better use for all of society than a good government? (And we can discuss if the US government is a good government in that sense, but that's beside the point I'm making).
I'm pretty sure the answer to these questions is No (he would have still done it) and No (a good government can put money to better use for all of society).
Or do you think the single mom with 3 kids working 2 jobs and still can't pay rent and health care cares about electric cars and rockets?
Edit: I still think what he's doing is important and impressive, and it's ok that he is one of the richest people on Earth. However, that doesn't mean the US needs to have a better tax system for the rich and better social pillars.
> Do you think that he wouldn't have done what he has done if there was a wealth tax in the US?
Maybe he would've left the country and tried to build something elsewhere. If he didn't, you also can't proclaim to know that he would've pursued his projects with such vigor in the presence of a wealth tax. The wealth tax idea has been tried before and has failed, so whoever is promoting it at least has to explain why this time is different.
https://www.businessinsider.com.au/what-happened-when-the-we...
> Or do you think the single mom ... cares about electric cars and rockets?
Climate change (EVs) isn't only going to impact the rich. Also, reusable rocket tech is massive value add to our society including to regular people; satellites - which working class people rely on, plus diversifying life in order to reduce existential risk which is something everyone should care about.
I'd argue we have a good but very inefficient (by-design) government. The US government is optimized to prevent tyranny, definitely not for efficiency. Departments operate on a 'use it or lose it' budgetary basis, there's very little mechanism to use funds efficiently.
Considering that all of his wealth is tied up in TSLA and SpaceX, allowing him control (and resulting in their success based on taking risks), and considering that he reinvests most of his excess capital back into his companies, your answer is not based in reality, despite your appeal to emotion.
It's comical, but also tragic, that you also think the government can put his money to better use. The F-35 program alone is $173 billion over budget.
Perhaps for the consultants and lawyers that suck up all the funds while the rail is never built.
California simply does not have the political, legal, and governmental infrastructure succeed at megaprojects.
Most major cities in the state can't even overcome the legal and policy hurdles for housing development or light rail, and High speed rail is a magnitude more difficult.
In the darkest days of the model 3 production, do you think there’s much of a difference between him and the single mom with 3 kids and 2 jobs?
Sure, I can accept that the work a single mom is doing is much nobler, much more humane and much more deserving of our collective conscious assistance.
But there’s something to be said of our hypocrisy if we (via govt) tax Elon’s wealth _today_ when those same people are unlikely to have to assisted Tesla during _production hell_ (there was talk of Apple doing some Tesla acquisitions; but can’t remember if the US govt was in talks to help Tesla out there)
Elon’s wealth didn’t come out of nowhere. Many many people consciously invested. The US govt _already_ has access to every single one of those people’s wealth via existing taxes. Despite that, we have a society with non-zero single moms who can’t pay rent & healthcare.
There’s something wrong in our society here, sure. A wealth tax doesn’t seem to address that problem though. Heck, if the US govt could’ve put taxpayer money to ease off on Model 3 production hell then yes taxing Elon’s gains today would be fair. Otherwise, it’s just unfair, inefficient.
When someone buys a share of Tesla for $800, that money doesn't disappear. It's received by another person. Very little work is done from this exchange, so it doesn't make any difference for the single mom or government.
Do you think that he wouldn't have done what he has done if there was a wealth tax in the US?
I think the answer to this is a resounding Yes, he would not have done it.
Tesla and Musk is the perfect example of why a wealth tax on capital is insane.
Tesla market cap is 750 Billion, but the profit is 500 million, and the stock owners that haven't sold have realized $0 profit.
A 1% wealth tax on Musk's 200b ($1b) would be 4 times higher that the profit of the entire company.
Under the current system, the moment he cashes out any stock, he will have to pay taxes on his actual profit. The reason we income instead of wealth, is that wealth can go up and down without the owner seeing any benefit.
> The reason we income instead of wealth, is that wealth can go up and down without the owner seeing any benefit.
I don't think a wealth tax is the right solution, a person that holds wealth definitely does derive a benefit from that wealth -> in the form of control (of a company), collateral (borrowing money at sub-inflation rates), and influence.
Check out Islam's Zakat, which has been proven to work. It's not a wealth tax per se as proposed by some foolish and unrealistic policies, but cash sitting in the bank is taxed at 2.5% (if it is above a certain threshold), and its proceedings go to the needy and poor, among others.
Yeah, Totally I agree that wealth comes with benefits, even if it cant be spent. I am curious how the collateral works without with owner of wealth ever having to realize income. I suppose the way it could work is moving from loan to loan, using the newer ones to pay off the older ones. I wonder if there is some way to fix the tax codes to address this.
The only successful model that is remotely close that has been historically proven is Islam's Zakat, a form of charity tax if you will. It doesn't force you to sell shares of your company, unlike some proposals I saw by dems.
I did not see a single politician refer to Zakat in any of their proposals. Note that they'd have to get rid of income tax as well to make things just.
Because a car company that manufactured 500k cars is worth _more_ than the entire car industry combined... which manufactured 70 million cars? This is irrational exuberance.
I agree the valuation is too high. But we should note that most of those 70 million cars are soon to be obsolete, and their resale value is going to crash very hard. Anyone buying a car these days should think twice about their purchase.
Not sure if you're talking about the timescale of obsolescence or the timescale of the value crashing. One could make the argument that ICE cars becoming obsolete is an event that has already happened, so let's set that aside.
You're right that my view of this is US-centric, my bad for that.
Value crashing is interesting. Cars have a fairly long lifespan so the transition to ownership of EVs is slow, I would agree with that if that's what you're saying. But the transition to crashing value does not have to be as slow. If the perceived value of an option is 2% better than another option, that does not equate to a 2% price difference. It equates to a much bigger price difference.
Of course a lot of EVs are still crappy and the perceived value of ICE cars is still high due to rampant ignorance about charging options (in the US and Europe) or simple lack of charging options (in the developing world). But that can change very quickly as EVs and the infrastructure get better, and then even though the ownership transition is slow, people will be stuck owning ICE cars when they would prefer to own something 2% better, or 10% better, or 90% better.
Since profit tends to zero, the entire car industry converges on paying its own bills and nothing else. Any new company that shows signs of growth potential is way more significant to investors - although, I admit, this might be a little overboard.
When you find out that Tesla has their finger not only in car manufacturing, you realize that they should never be evaluated as a car manufacturer alone. They compete in Solar power (solar roof), in battery storage (commercial and private), autonomous driving (Waymo is valued at more than 100 billion, why shouldn't Teslas autopilot division alone too), energy autobidder, own battery tech and so much more. Maybe they are a bit high right now, but just simply comparing Tesla to VW or whatever doesn't cut it.
"efficient allocation of resources" doesn't mean "the guy who owns popular companies gets unimaginable wealth". Obviously what constitutes efficient is subjective, but I can't see how this kind of allocation is good for the world.
> Imagine seizing his assets and distributing it to the people via a wealth tax
A wealth tax wouldn't seize assets, but given that Musk's "wealth" is almost entirely his shares in Tesla, SpaceX, etc., how would he pay a 5% tax on his total wealth without liquidating a bunch of Tesla shares? His physical assets are unlikely to be worth $10bn.
That's definitely better for the share price, but what does the government do with those shares? Again it's paper wealth apart from maybe some small amount of dividends generated.
And having the US Government "seizing the means of production" - and that's how it would be spun - is a great way to turn people against it!
A wealth tax is most likely unconstitutional anyway, the same way income tax was before the Sixteenth Amendment.
I'm not really arguing whether it's a good or bad idea. It's just that, as far as I know, it's the norm in our society and others so it's odd if someone wants to debate it as a hypothetical that people might turn against.
I'm not sure of the difference between a "wealth tax" and a "property tax". Are you saying the sort of property tax homeowners pay in a lot of places would be unconstitutional at a Federal level? Or are you saying it's unconstitutional at any level?
A property tax is a wealth tax yes, and as you say it would be unconstitutional at the federal level, but they're enacted at the state or municipal level which is legal. At least that's the obvious position and the fact that the federal income tax required an Amendment supports that.
The federal takeover of a government-created corporation in a financial crisis to prevent it collapsing isn't really a good comparison to an ongoing process of "taking" large chunks of successful companies because their owners are required to pay taxes. And there is criticism of that control now, even if people accepted those actions were required at the time:
A lot of people want to get the government out of Fannie Mae and Freddie Mac, and I'm no expert, but I think they are obviously wrong. You have a systemically important entity that has to have a government guarantee, then it has to answer to the government as at least a 51% shareholder and have restrictions on distributing profits. It seems obvious and simple and correct to me, not some sort of temporary aberration.
Nothing against Musk, but the specific notion that this proportion of value to wealth is "efficient" seems stupendously backwards. Though I agree that welfare is also not efficient, but only if the goal is solving the problem of suffering and poverty. However, welfare has a second, shorter term function: Necessity.
No doubt Tesla is worth a lot. The question is when. As of right now I always have had the thought that they can’t get past their manufacturing problems.
It is a habit now to think this. Not sure if it is still valid.
Manufacturing is only half of it. The maintenance back side and parts market is all messed up too. So you not only have a car with some manufacturing issues, but you can't get parts or tools to fix those issues. Then there is the problem with Tesla remotely disabling features after resale.
This isn't exclusive to Tesla either. I'm really hating this trend towards "Unauthorized Bread" in the automotive sector.
Also, i wonder when some manufacturer will deliver a plain jane electric vehicle suitable for the developing world.
None of the eletric cars seem fixable by standable mechanics somewhere outside the western world. This is a shame, because eletric vehicles could lower the cost for transportation significantly for the majority of the world.
I'm been an avid comics fan all my life. I remember "millionaire Bruce Wayne" giving way to "billionaire Bruce Wayne", and idly wondering how long before we'd see the first reference to "trillionaire Bruce Wayne".
Regardless of if they're good or bad people: Gates made sense, Buffett made sense, Bezos made sense.. Musk, I simply don't get how his achievements (as significant as they are) add up to this outcome.
The idea that Tesla will control the EV market is pretty unrealistic. Most major auto manufacturers already have an EV that competes very well with Tesla models. Build quality and repair services are still issues for Tesla as well.
Why doesn't this make sense? The greater roadmap is that Tesla is a energy company paving the way for an all-electric world from battery production to EVs, while SpaceX is revolutionizing spaceflight and starting mass commercialization with Starlink.
Batteries are being disrupted by hydrogen though. It's unlikely we'll see this all-electric world since it is basically obsolete given the rapid pace of hydrogen advancement.
I agree it's not conventional wisdom yet, but given the way the evidence is piling up I'd say it's only a matter of time. Serious conversations about energy are nearly totally dominated by hydrogen and related subjects. There has been an endless stream of new hydrogen investments, with total investments well into the hundreds of billions of dollars.
While there are still substantial numbers of naysayers, they always seem to be coming from a position of ignorance. I suspect if they actually knew about current events in the energy sector right now, and assuming they're open minded, then they should also agree that is the case. And if this is the case then yes, this is more matter of fact than speculation.
The other name I associate with hydrogen is Toyota, and I feel like most of the recent news from them has involved batteries. In fact I think I saw something about a next generation battery coming soon that's supposed to be a big advance. So I would assume they are at least not putting all their bets on hydrogen.
If you want to be carbon neutral, but quickly refuel, why hydrogen and not just synthetic hydrocarbons? What's the point of replacing all the infrastructure?
If that's all you've heard, it's likely that you are coming from a position of ignorance regarding events in the hydrogen world. There's hundreds of billions of dollars of investment right now, and even Toyota is arguably a small player in all of this.
That said, they and a few others (Hyundai, Honda, several Chinese companies, and a bunch of startup companies), are the ones pushing this in passenger cars. So from that perspective, it's not too far off from the truth.
However, outside of passenger cars hydrogen has been pretty much the dominant topic. 2020 was basically the year that utility companies, industrial companies, heavy transport companies, and multiple nations realized that hydrogen was both doable and in fact necessary in order to create a zero-emission world. Once you start looking at those industries, this becomes much more apparently.
Meanwhile, there's been nothing of substances when it comes to new battery technology. There's always a major announcement of some kind, but it never materializes into anything real. Sure, companies continue to put money into it, and that includes Toyota, but I suspect a continuation of nothing being achieved in reality.
> If you want to be carbon neutral, but quickly refuel, why hydrogen and not just synthetic hydrocarbons? What's the point of replacing all the infrastructure?
Synthetic fuels are one of the major ideas being pursued as being part of the hydrogen society. That and ammonia, among a few other hydrogen storage ideas. These aren't ignored ideas, and multiple companies are pursuing them. We could very well ships or airplanes powered by chemical made by combining hydrogen with carbon or nitrogen.
However, the main realization seems to be that hydrogen itself isn't that difficult to handle. With proper precautions and the right use materials it doesn't leak or corrode. It can be blended with natural gas at something like 15%, and if the pipelines are retrofitted it seems like 100% is perfectly doable. It can also be stored underground in vast quantities too, similar to how natural gas is stored in salt domes and caverns. Improvements in electrolysis and fuel cell technology seem to make using hydrogen both efficient and potentially very cheap. There's a lot of talk of green hydrogen being cheaper than fossil fuels within the decade. And you'll need anyways it for industrial heat and chemical related reasons, so we're almost at the point where hydrogen is unavoidable.
Hydrogen is just another form of battery or energy carrier, just like gasoline today. We still need batteries (of all kinds) to power the future as energy needs and mobility increases.
There are still major issues with hydrogen containment since it can leak out of just about everything (being the smallest atomic structure) and also many hydrogen systems are used as fuel-cells to produce electricity rather than combustion for physical force. In that case, a Tesla vehicle powered by hydrogen would just have a fuel-cell energy store but still retain the same electric drivetrain.
Well that's the thing: fuel cells are batteries, just that you use water as your main resource instead of heavy metals. A major advantage since water costs nearly nothing and heavy metals cost a lot.
You sometimes hear people make the argument that it's too inefficient, but from a purely theoretical point of view this shouldn't be case. Fuel cells and batteries should have very similar efficiency levels in the long run. If you buy into that concept, then it should be almost all fuel cells in the future, with other types of batteries playing an auxiliary role.
> There are still major issues with hydrogen containment since it can leak out of just about everything (being the smallest atomic structure)
Not really true anymore. We've made major advancements here, especially with newer tanks made out of carbon fiber and lined with HDPE. It's not something we have to worry about too much now.
> and also many hydrogen systems are used as fuel-cells to produce electricity rather than combustion for physical force. In that case, a Tesla vehicle powered by hydrogen would just have a fuel-cell energy store but still retain the same electric drivetrain.
They're nearly all like that. Fuel cell cars are basically electric cars with a fuel cell as the source of electricity. This is a huge win since you only need a small battery (or capacitor) for power smoothing and regenerative breaking, instead of having to lug a giant battery around.
By nearly every conventional metric, TSLA is overvalued even in comparison to a market that may or may not be also overvalued.
Although, Elon's net worth is the highest, it's nearly all in TSLA stock of which Elon has about ~20% of all shares. If he sold or made this asset liquid, it would decrease his power in his own company. Considering Elon's methods and behavior can be unconventional to say the least, he probably needs to keep as much power as possible.
I assume that if he was made to step down from the CEO position, TSLA valuation would drop like a fly - so he could easily re-buy everything he would have sold. I don't think that's the path he is going to take, but it's not impossible.
TSLA has a P/E ratio of 1500. Even though they're a growth stock it's a generous valuation to say the least. The stock price has been driven up by
(1) a lot of retail investors loading into the stock & call options, primarily because it's a momentum hype/meme ticker with Elon at the helm, and easy access through Robinhood et al combined with stimulus money.
(2) large cap tech stocks have been rallying during COVID; capital has had nowhere else to go with the Fed crushing the USD and non-tech companies suffering,
(3) shorts have been repeatedly obliterated and are now mostly staying away. Short interest is now only 6%.
(4) TSLA was recently included in the S&P 500 at a ~1.5% weight, so index funds and ETFs have been forced to buy it due to a mandate to track the index.
Elon does not lie, he just understand minds change. Of course he meant that when the statement was made, and he will be perfectly fine to forget that and claim going public is best for the company.
A very interesting side story. Leon once tweeted that starlink has some risk of being shot down when flying over China. That's before Tesla got the Shanghai deal. And now, I could not find that tweet or any screenshot of that. I bet Leon spent some good money to make it disappear.
Who else feels like the TSLA price is a gigantic bubble at this point? Not that it's not valuable or worthy of some of the growth it's seen, but almost 10x in one year looks like a classic bubble to me.
LE: Also, I don't really understand how people keep falling for this stuff. I have no doubt that some are very well aware that it's a bubble and just think they can time the crash correctly, but I see _a lot_ of people with incredibly bullish views on this. And to be honest, it's the same with Bitcoin.
Just because something hasn't happened yet, doesn't mean it will never happen. Tesla is doing extremely well and has a bright future but it's hard to make a solid argument for its current valuation.
Yeah i didn't mean to imply that the bubble assertion was false, merely point out that a ton of people also think it's a bubble (and have for years), and so far have paid a huge price for that bet.
The fascinating thing to me is that if you bring Tesla valuation up the response is "lol dumb short seller, prepare to lose another X billion this year!".
Tesla's most valuable product definitely isn't anything made in a factory or produced by their programmers, it's the financial cult that has amassed around it. It's people who are putting every penny of their money on Tesla calls and spending every hour of their day making sure to spread the good news of Tesla and metaphorically stoning anyone who dares speak against Elon Musk.
This will almost certainly not end well at some point, especially since the valuation exceeds even a scenario where Tesla becomes a global monopoly in a number of industries. How long will it take for the cult to realize this? Maybe never.
> making sure to spread the good news of Tesla and metaphorically stoning anyone who dares speak against Elon Musk.
That's an interesting take. Even if true today, does not reflect the historical reality at all; in fact I remember quite the opposite: for the majority of the history of the company I remember hearing that he is a clown, Tesla will go bankrupt, the product won't work, false stories on the product by major newspapers, the product won't make money, the factory won't scale.
Elon is a clown; sued for libel and by the SEC; Elon has admitted the company was weeks away from bankruptcy during Model 3 development; my Tesla was a lemon, Tesla makes almost all of its profits from regulatory credits; 500K production was only achieved by creating a second factory (not part of the original 500K projection); the Gigafactory is only 30% done and Tesla has abandoned it in favor of expansion with third party battery manufacturers.
Point is there is (or at least was as of 1.5 years ago) way more negative coverage of Tesla than positive, accuracy aside, which contradicts GP's take. There's been enough outlets to show the bad side and it was the most shorted stock which proves the point.
At what point do you believe your statements are delusional if not when Musk has become to wealthiest person in the world, Tesla one of the most valuable companies by market cap, and the world bends over backwards to get their factories in their backyard or get their cars in their garages?
Elon will set foot on Mars and you’ll still have the delusional yelling Tesla is a farce I suppose.
You might be thinking too small. The USD derives much of its value from the 'petrodollar' deal from the 1970s. Tesla is set to replace oil, so maybe the USD itself will be backed by Tesla.
My impression is that aside from some crazies who generally get downvoted unilaterally, you rarely see antagonistic opposition to saying Tesla is overvalued. This doesn't hold if you instead make a meta observation that claiming it's overvalued would earn antagonism.
It's not that surprising. The former is voicing an opinion. The latter is effectively just a pre-emptive insult to everyone who disagrees with you.
Similar arguments hold for any popular unpopular opinion.
I am trying to take a balanced view on this, from both sides (long/lovers and shorts/haters), based on some preliminary research.
Please correct/add if I am wrong/missing details.
So far some things to be taken into consideration:
1. Investors
To be fair, Tesla received bad press before Cathy Wood's predictions came true and decimated all short sellers, leading to a short squeeze (major bull contributor)
- Car market: Stock price makes sense based on Ark's predictions, at least for now. Taking into account total addressable market (TAM) and market cap, Tesla's seeming monopoly with its 3-4 year lead on technology compared to all other competitors.
- It makes sense how investors are valuing Tesla to include all ICE companies, betting on Elon's probability to capture this market (Market cap -> TAM bet) This is not including additional speculative TAM (insurance, energy, self-driving, etc.).
Max bull case based on ARK's 7k prediction = 7k/5 (stock split) = 1.4k price target
- Governments are going to start banning ICEs by 2035. So the EV trend is definitely happening.
2. Consumers
- Product: Customers reviews and product seem solid. Value proposition to prospective new customers also make sense in terms of saving on gas long term compared to electricity.
- Hype: Yes, there is a cult around Elon, and defects or abuses get overlooked in favor of Tesla
- Supply: There might be a problem with cobalt supply due to its majority based on Democratic Republic of Congo. Ethical issues aside (child and forced labor)- One tesla contains ~4.5 kg of cobalt, compare this to global electronics' demand, there will be a big shortage (Glencore collaboration).
Elon is working with CATL do develop new batteries that get rid of cobalt, but this is a long shot, and even if realized, efficiency with a new tech is at stake.
- Demand: There is no doubt current market demand for EVs crossed an inflection point where consumer education is maturing due to Tesla. But most current customers are catered toward the rich (Boomers and Chinese).
- There is some research suggesting that millennials (Tesla's next biggest target) don't want to own a car (depreciating asset), let alone afford one- given current economic situation, home ownership (charging), and remote work. Tesla' promise on the $25k car might help here. But they are also the major fans and Robinhood investors in Tesla...
Not sure, overall I am glad that Tesla is forcing other companies to follow its lead, but a level headed approach is always good advice.
The craziest thing is that TSLA was in an anti-bubble just 2 years ago, with the price clearly suppressed far below a reasonable valuation. Now it's even farther from reasonable. Something about TSLA just makes people lose their minds in both directions.
Amazon is arguably operating very anti-competitively. That justifies the p/e. What could possibly justify 1000+ for Tesla? Its like the zombie towers in world war z, just pure brainless masses of dummmm money.
We are going to live in a low rate world for a long, long time. Cheap money means time horizons get expanded. This is the perfect environment for "moonshot" stocks because investors don't care if you say it'll take 8 years to make your first dollar (looking at you, QuantumScape)
> Who else feels like the TSLA price is a gigantic bubble at this point?
It's close to being a TRILLION dollar company. Think about it. It's so mindboggling. But then again, I felt that amazon was a gigantic bubble forever too.
I've said it before and I'll say it again: at this point tesla is going to be spectacular one way or another. It's been bid up to such an extreme degree that it can't tread water. So in 2030, we'll look back and be amazed at what Tesla has become no matter what.
> Who else feels like the TSLA price is a gigantic bubble at this point? Not that it's not valuable or worthy of some of the growth it's seen, but
It's a classic "there will be a greater fool down the road" theory, like the tech companies that proclaim they will never issue a dividend (in which case the only reason for buying the stock is that you believe someone else will buy it later).
The correction will be painful for all concerned. An overlarge market cap isn't really that great. Sure, for a while you can raise capital extremely cheaply and that's nothing to sneer at! But it leaves a couple of problems: when it's big it's harder for it to grow, while a smaller mkt cap leaves more room for growth. And people are buying growth. The other problem is that it traps the leadership. 20 years ago when Time Warner bought AoL there was much discussion in the press about the various business logic/synergies (or lack thereof) between the two businesses. But really the primary motivation seemed much simpler: the only way that Steve Case could retire (without cratering the stock price) was to sell/merge the company into another entity of at least similar size. Tesla can't merge with any car company, or many other companies for that matter.
As for the shorts:
A couple of years ago my kid worked for a billionaire with whom he remains friendly. The other day he joked to me, "My greatest respect for XXX is that he is the only person I know who has made money shorting Tesla"
Good for Elon. He put his own money into Tesla keeping it from going under and still holds 20% never selling any shares. He’s even complained in the past that Tesla stock was too high. His significant ownership of SpaceX also helps. Disclaimer, I’m a Tesla shareholder and could retire today off my gains.
Not just never selling shares. Convincing the other shareholders to gift him 55bn of their shares as annual salary. Smart but not repeatable infinitely, sooner or later some of you will button on that you are being fleeced. (So sell now and retire, or regret it later.)
I really wish they would stop this reporting of who is the richest. It is lazy reporting and just recalculates by the minute based on stock values.
I'd rather see who has the highest liquidity. Who is holding on to cash they could, right this minute, spend, or stocks they could freely sell without tanking their own companies? Not Musk, not Zuck, not Jeff... at least, not likely.
I wonder if there's really a difference between the wealth of these ultra-rich people, besides a different number.
I.e. is there anything someone with 200B can do that someone with "only" 50B can't?
Putin and the Saudi king are probably in a different category as they don't "just" have ultra-wealth, but also political power (as heads of countries), military at their disposal, etc.
But, say, between Jeff Bezos, Warren Buffet, Elon Musk, Bill Gates, et al? (I know they don't have all their wealth in cash, which might change things a bit. But still)
Perhaps my imagination is lacking?
Edit: Also, I wonder how long before the ultra-rich start spending in truly extravagant projects, besides just bigger boats. I would imagine that by now someone besides Elon would be designing/building their own personal space station or something like that..
I personally don't get the Putin thing, at all (nor does it seem to be well sourced). Saudi Arabia is an absolute monarchy, so of course the royal family can effectively use the nation's money as their bank account. But why and how would Putin amass hundreds of billions privately? A few billion is enough to meet any personal needs if he retires, and he currently has extreme political power. What would his holdings look like and how would they be so well hidden? The only way to reach a 10 or 11 figure net worth in the West is to own a lot of a public company.
I agree with this. There's no way Musk or Bezos could liquidate all their shares and retain that value.
Best way to be worth $1m. Create a company with an idea, find an investor and sell 1% for $10,000 and on paper you're worth $990,000. That money doesn't exist, just the $10,000.
It's not lazy, it's highly interesting and people obviously love hearing about it, given how popular these stories are. Why care about liquidity? All of these hundred-billionaires can buy whatever they want anyway.
These people can personally borrow large amounts at such low interest that it’s effectively cash (if not 0% altogether) because a bank will value its relationship to these people that high (because they’re probably also the corporate bank for these companies).
I also think you’re extremely underestimating just how big these companies are. Jeff is liquidating ~1 billion a year just to fund his space company. Zuckerberg sold $280 million in 1 month in 2020 for walking around money.
No they can’t liquidate their entire position. They do have effectively almost unlimited financial reserves through multiple different channels. Said another way, they have $10s of billions in buying power even if they can’t access that entire wealth instantly as cash.
Can you expand on what are those other channels are?
I'm geniunely curious.
Of course, probably just by virtue of being "friends" with other high net-worth individuals you will have access to financial vehicles that allow them to buy/invest without cash but I don't really know exactly how.
Securities lending, OTC Swaps, and highly favorable margin rates (although the underlying economics of this are actually driven by the securites lending business)
I always liked Felix Dennis' metric that he said in his book about "lifetime spending totals". Which he claimed he won at (hundreds of millions) with the amount he spent on crack, wine, and hookers. Good times.
Congrats to Elon for finally learning from the Steve Jobs handbook. Make a cult of your followers, and they will literally take in everything you throw at them.
I cannot describe how many times I have heard the infamous "iT'S mOrE tHaN a cAr cOmPaNy"... All bark no bite, they sure as hell are not a major car company since they didn't manage to even deliver 500 000 vehicles this year ( "almost" 500 is not 500, especially since you have been promising 500 000 delivered cars for the last 6 years).
Still waiting to see how their "revolutionary" battery technology is going to look like, SolarCity was almost bankrupt, which is the reason Tesla had to buy them to save Elon's cousins...
They do got a shot at driverless technology, but the question is how big of a market is that, and how much are they going to own..
Waymo is also a danger in that field...
This is the same playbook amazon did - give investors a vision, convince them short term profit are less important than the eventual goal. Get the capital at a really really low cost, and then use these capital to build hard things, and crush competition.
Whats the path that Tesla crushes the competition though? Seems like existing competition can ride the coattails if anything. Only way to stop it would be to engage in some incredibly anti-competitive behavior.
Tesla is already losing to the competition. See Europe where it is no longer the top selling EV company. This is probably the biggest difference between Tesla and Amazon. Namely, that Tesla isn't able create any kind of network effect to keep competitors out.
Tesla's electronic platform is at least a generation ahead of big auto makers. Confirmed from my friends at Shanghai auto. Other good things are the software platform, direct sale channel.
So Tesla is like 6 months ahead w/ some modest differentiators and no moat for those differentiators? I think Tesla is doing good things and Elon is some fresh air but still I don't see the competition giving all their customers away (or even a huge portion). Isn't it customers that matter?
Where is 6 months coming? I routinely hearing people in auto supply industry claims 3-5 years is usually how a new component enter market with serious adoption. For system like Tesla's entire electronic, 5-10 years seems what they are speculating.
The value of TSLA arises from having RL Tony Stark behind vs faceless commoditized brands (VW, BMW, etc.). It's the Apple of cars and that's invaluable.
How does one get over the frustration of not having invested?
It’s particularly acute for me because I made a serious plan for my brother and me to put our entire inheritance on one stock intending to level our money up by an order of magnitude (6 figures to 7) and achieve financial independence. I chose TSLA in January 2018 as the stock with the highest probability of going up by an order of magnitude; we were looking for the best time to buy; I said in August 2018 that I thought a low of 200 was plausible, on a time scale of months, before going up to the hoped-for $650B market cap in a decade.
TSLA hit 200 in May 2019, nine months after I made that prediction. I was trying to avoid looking at the stock market to cut the risk of overreacting to trivia, and didn’t see it.
But my brother was watching, he saw TSLA hit 200 — and he didn’t say anything about it. We’d worked on this project for most of 2018, and then in 2019 my prediction, my only low price prediction, happened: and my partner in the project simply took no action. And we missed the whole thing completely.
Today, three years from the inaugural discussion of this strategy in January 2018, we would have $11,500,000 and our lives would be transformed. Putting our inheritance on TSLA aiming for an order-of-magnitude increase was my exact strategy. I made an uncannily perfect call of 200 (split-adjusted 40) as the lowest price we would see. My brother did not help me at all; and now every day I feel anger over this, I feel he lied to me about his support for our joint project, he has no sensible explanation for his lack of action (“I thought you probably already knew” and even less sensible excuses).
Financial losses on the stock market can cause lots of hard feelings, and missed opportunities can too. How does one cope with this?
There are opportunities all the time. Go look at the chart for AMD, Netflix, aaple. Go apply your learning skills from computers to the market. Don’t look at the past but to learn.
Yep. That’s the right response. Put the past behind, and move forward productively. The reason I posted this on HN is that it’s hard to muster the emotional wherewithal to do that after such a setback. I thought comments from this community, where the people here are capable of understanding the issues, could help.
Just because it would have turned out good in hindsight doesn't mean it wasn't a stupid idea. If you had invested and lost it all, how would your brother have treated you? Why blame and be angry on him?
And you never know if you would have sold earlier. Like all people saying "wish I bought bitcoin back then I would be so rich now!". No, you wouldn't. You would have cashed out when that $1k was $10k, not daring hold to $1M.
> Just because it would have turned out good in hindsight doesn't mean it wasn't a stupid idea.
The evidence confirms the the accuracy of my predictions. It’s not empirical to brush aside evidence because it’s inconsistent with your prior. If you don’t sharply revise your prior with new evidence, it might be that your P(X | ~A) term is too large. You might be overestimating the probability that I would be right when your prior said it was a stupid idea. Instead it might be very unlikely for me to pick the best stock out of 3000 when you don’t think it’s possible for me to do that, so your idea that it’s not possible for me to do that is off. Your prior was off, and if you’re a Bayesian you now need to update your prior sharply.
My argument, expressed repeatedly to my brother over the course of 2018, was that the American stock market regularly turns up stocks that increase by an order of magnitude or two, and in a subset of cases it’s reasonably possible to spot that ahead of time.
Pop quiz: name 3 stocks that have gone up by an order of magnitude, over any time frame in history. Pretty much anyone familiar with stocks could do this. Follow-up, out of those, name one where you think you could reasonably have predicted it in time to invest. Most people will readily come up with one where, yeah, reasonably, you could tell at the time.
My strategy was based on taking these facts seriously. It was further based on the observation that it’s easier to make one good decision than five or ten. My brother’s and my situation with an inheritance, where the money was not committed, where we could afford to lose it without dying, gave us an opportunity to make one good decision and thus end all personal financial concerns forever.
> If you had invested and lost it all, how would your brother have treated you?
We discussed that contingency. If we’d invested it all and lost, my brother had a solid backup plan where he’d be okay, and I did as well. This inheritance was available to invest.
> Why blame and be angry on him?
My brother repeatedly expressed his support for this plan. I blame and am angry because he consistently expressed support for this plan through most of 2018, then failed to act in 2019 when he needed to take concrete action in support of the plan.
> And you never know if you would have sold earlier. Like all people saying "wish I bought bitcoin back then I would be so rich now!". No, you wouldn't. You would have cashed out when that $1k was $10k, not daring hold to $1M.
The stated plan was to hold to a pre-split price of 3800 or 6000, based on Elon Musk’s commitments to meet specific market cap goals laid out in his 2018 compensation package. We were prepared to hold til 2028. TSLA is now at a pre-split price of 4400, in the range of our goal price, so we’d now be trying to figure out the exact right time to sell.
You spent a year working on a 'project' to invest your entire inheritance in a single stock, while refusing to monitor the market itself? Your brother sounds like he wasn't really on board with the plan, which is the prudent, sensible course of action.
> You spent a year working on a 'project' to invest your entire inheritance in a single stock, while refusing to monitor the market itself?
This was a difficult project. After two serious runs at buying TSLA in 2018, where we got to the brink and then backed off, I made a strategic mistake. I was concerned about the risk of me overreacting to trivial events, so I restricted my intake of stock market information to reduce that risk. My mistake was, I put in too heavy of a filter.
My mistake is what created the opportunity for my brother to substantively contribute. He could have ridden to the rescue of our joint project by mentioning it to me when TSLA hit 200. I had repeatedly opined in August 2018 that it seemed possible for TSLA to fall as low as 200 before climbing to the hoped-for 3800 or 6000 in a decade. My brother saw TSLA hit 200 in May 2019, but he didn’t see fit to mention it.
> Your brother sounds like he wasn't really on board with the plan,
Yes, in hindsight, you’re right that my brother wasn’t really on board with the plan. All I can say is that he gave every indication that he _was_ on board. It appears to me that he lied in my face. This speaks to family issues that aren’t going to be of interest to HN so I’ll say no more, except to note that missed investment opportunities are a thing that can foreground classic human problems.
> which is the prudent, sensible course of action.
Bold action when opportunity presents is a component of that, in a broader view.
Question:
How did elon maintain his share in Tesla during the finance rounds? He was not a cofounder. During the years, he did not have other significant sources of income. And Tesla has been capital hungry for a long time.
I am quite interested in his techniques, and am guessing so do a lot of founder wannabes.
Why I find those types of comparisons unreal? Because objectively speaking there are a lot of families with well-hidden wealth that can make Bezos or Musk fortunes look like pocket change. It's common sense.
competition aside, do you think that Tesla will hold the same valuation if Elon Musk leaves or dies? If you think Tesla valuation is just Elon hype, that's just a huge risk by itself.
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[ 0.28 ms ] story [ 204 ms ] threadI'm pretty sure the answer to these questions is No (he would have still done it) and No (a good government can put money to better use for all of society).
Or do you think the single mom with 3 kids working 2 jobs and still can't pay rent and health care cares about electric cars and rockets?
Edit: I still think what he's doing is important and impressive, and it's ok that he is one of the richest people on Earth. However, that doesn't mean the US needs to have a better tax system for the rich and better social pillars.
Maybe he would've left the country and tried to build something elsewhere. If he didn't, you also can't proclaim to know that he would've pursued his projects with such vigor in the presence of a wealth tax. The wealth tax idea has been tried before and has failed, so whoever is promoting it at least has to explain why this time is different. https://www.businessinsider.com.au/what-happened-when-the-we...
> Or do you think the single mom ... cares about electric cars and rockets?
Climate change (EVs) isn't only going to impact the rich. Also, reusable rocket tech is massive value add to our society including to regular people; satellites - which working class people rely on, plus diversifying life in order to reduce existential risk which is something everyone should care about.
It's comical, but also tragic, that you also think the government can put his money to better use. The F-35 program alone is $173 billion over budget.
California simply does not have the political, legal, and governmental infrastructure succeed at megaprojects.
Most major cities in the state can't even overcome the legal and policy hurdles for housing development or light rail, and High speed rail is a magnitude more difficult.
Sure, I can accept that the work a single mom is doing is much nobler, much more humane and much more deserving of our collective conscious assistance.
But there’s something to be said of our hypocrisy if we (via govt) tax Elon’s wealth _today_ when those same people are unlikely to have to assisted Tesla during _production hell_ (there was talk of Apple doing some Tesla acquisitions; but can’t remember if the US govt was in talks to help Tesla out there)
Elon’s wealth didn’t come out of nowhere. Many many people consciously invested. The US govt _already_ has access to every single one of those people’s wealth via existing taxes. Despite that, we have a society with non-zero single moms who can’t pay rent & healthcare.
There’s something wrong in our society here, sure. A wealth tax doesn’t seem to address that problem though. Heck, if the US govt could’ve put taxpayer money to ease off on Model 3 production hell then yes taxing Elon’s gains today would be fair. Otherwise, it’s just unfair, inefficient.
Is this a joke?
I think the answer to this is a resounding Yes, he would not have done it. Tesla and Musk is the perfect example of why a wealth tax on capital is insane.
Tesla market cap is 750 Billion, but the profit is 500 million, and the stock owners that haven't sold have realized $0 profit.
A 1% wealth tax on Musk's 200b ($1b) would be 4 times higher that the profit of the entire company.
Under the current system, the moment he cashes out any stock, he will have to pay taxes on his actual profit. The reason we income instead of wealth, is that wealth can go up and down without the owner seeing any benefit.
I don't think a wealth tax is the right solution, a person that holds wealth definitely does derive a benefit from that wealth -> in the form of control (of a company), collateral (borrowing money at sub-inflation rates), and influence.
Yes, I do.
The only successful model that is remotely close that has been historically proven is Islam's Zakat, a form of charity tax if you will. It doesn't force you to sell shares of your company, unlike some proposals I saw by dems.
I did not see a single politician refer to Zakat in any of their proposals. Note that they'd have to get rid of income tax as well to make things just.
But there are far too many needlessly impoverished people in this country to convince me that there's something "efficient" about this.
This perspecitive is highly US centric. For instance, a lot less people buy new cars in europe, not to mention the developing world.
You're right that my view of this is US-centric, my bad for that.
Value crashing is interesting. Cars have a fairly long lifespan so the transition to ownership of EVs is slow, I would agree with that if that's what you're saying. But the transition to crashing value does not have to be as slow. If the perceived value of an option is 2% better than another option, that does not equate to a 2% price difference. It equates to a much bigger price difference.
Of course a lot of EVs are still crappy and the perceived value of ICE cars is still high due to rampant ignorance about charging options (in the US and Europe) or simple lack of charging options (in the developing world). But that can change very quickly as EVs and the infrastructure get better, and then even though the ownership transition is slow, people will be stuck owning ICE cars when they would prefer to own something 2% better, or 10% better, or 90% better.
> Imagine seizing his assets and distributing it to the people via a wealth tax
How would a wealth tax seize his assets?
And having the US Government "seizing the means of production" - and that's how it would be spun - is a great way to turn people against it!
A wealth tax is most likely unconstitutional anyway, the same way income tax was before the Sixteenth Amendment.
Look at Fannie Mae and Freddie Mac for an example of taking more than a sliver. https://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae...
I'm not sure of the difference between a "wealth tax" and a "property tax". Are you saying the sort of property tax homeowners pay in a lot of places would be unconstitutional at a Federal level? Or are you saying it's unconstitutional at any level?
https://nymag.com/intelligencer/2019/02/constitutional-conce...
The federal takeover of a government-created corporation in a financial crisis to prevent it collapsing isn't really a good comparison to an ongoing process of "taking" large chunks of successful companies because their owners are required to pay taxes. And there is criticism of that control now, even if people accepted those actions were required at the time:
https://www.nytimes.com/2016/11/15/business/dealbook/fannie-...
It is a habit now to think this. Not sure if it is still valid.
This isn't exclusive to Tesla either. I'm really hating this trend towards "Unauthorized Bread" in the automotive sector.
None of the eletric cars seem fixable by standable mechanics somewhere outside the western world. This is a shame, because eletric vehicles could lower the cost for transportation significantly for the majority of the world.
It seemed impossibly distant once. Not now.
Not at all.
But seriously, it's just price momentum. The best reason to buy a stock, to your average schlub, is because the price goes up.
"the rapid pace of hydrogen advancement" makes me think of Nikola...and Hindenburg Research.
While there are still substantial numbers of naysayers, they always seem to be coming from a position of ignorance. I suspect if they actually knew about current events in the energy sector right now, and assuming they're open minded, then they should also agree that is the case. And if this is the case then yes, this is more matter of fact than speculation.
If you want to be carbon neutral, but quickly refuel, why hydrogen and not just synthetic hydrocarbons? What's the point of replacing all the infrastructure?
That said, they and a few others (Hyundai, Honda, several Chinese companies, and a bunch of startup companies), are the ones pushing this in passenger cars. So from that perspective, it's not too far off from the truth.
However, outside of passenger cars hydrogen has been pretty much the dominant topic. 2020 was basically the year that utility companies, industrial companies, heavy transport companies, and multiple nations realized that hydrogen was both doable and in fact necessary in order to create a zero-emission world. Once you start looking at those industries, this becomes much more apparently.
Meanwhile, there's been nothing of substances when it comes to new battery technology. There's always a major announcement of some kind, but it never materializes into anything real. Sure, companies continue to put money into it, and that includes Toyota, but I suspect a continuation of nothing being achieved in reality.
> If you want to be carbon neutral, but quickly refuel, why hydrogen and not just synthetic hydrocarbons? What's the point of replacing all the infrastructure?
Synthetic fuels are one of the major ideas being pursued as being part of the hydrogen society. That and ammonia, among a few other hydrogen storage ideas. These aren't ignored ideas, and multiple companies are pursuing them. We could very well ships or airplanes powered by chemical made by combining hydrogen with carbon or nitrogen.
However, the main realization seems to be that hydrogen itself isn't that difficult to handle. With proper precautions and the right use materials it doesn't leak or corrode. It can be blended with natural gas at something like 15%, and if the pipelines are retrofitted it seems like 100% is perfectly doable. It can also be stored underground in vast quantities too, similar to how natural gas is stored in salt domes and caverns. Improvements in electrolysis and fuel cell technology seem to make using hydrogen both efficient and potentially very cheap. There's a lot of talk of green hydrogen being cheaper than fossil fuels within the decade. And you'll need anyways it for industrial heat and chemical related reasons, so we're almost at the point where hydrogen is unavoidable.
There are still major issues with hydrogen containment since it can leak out of just about everything (being the smallest atomic structure) and also many hydrogen systems are used as fuel-cells to produce electricity rather than combustion for physical force. In that case, a Tesla vehicle powered by hydrogen would just have a fuel-cell energy store but still retain the same electric drivetrain.
You sometimes hear people make the argument that it's too inefficient, but from a purely theoretical point of view this shouldn't be case. Fuel cells and batteries should have very similar efficiency levels in the long run. If you buy into that concept, then it should be almost all fuel cells in the future, with other types of batteries playing an auxiliary role.
> There are still major issues with hydrogen containment since it can leak out of just about everything (being the smallest atomic structure)
Not really true anymore. We've made major advancements here, especially with newer tanks made out of carbon fiber and lined with HDPE. It's not something we have to worry about too much now.
> and also many hydrogen systems are used as fuel-cells to produce electricity rather than combustion for physical force. In that case, a Tesla vehicle powered by hydrogen would just have a fuel-cell energy store but still retain the same electric drivetrain.
They're nearly all like that. Fuel cell cars are basically electric cars with a fuel cell as the source of electricity. This is a huge win since you only need a small battery (or capacitor) for power smoothing and regenerative breaking, instead of having to lug a giant battery around.
Hopefully he starts some other futuristic project...or two.
However, I do wonder if this isn’t a sign that the market is overvalued. How does it look historically?
Although, Elon's net worth is the highest, it's nearly all in TSLA stock of which Elon has about ~20% of all shares. If he sold or made this asset liquid, it would decrease his power in his own company. Considering Elon's methods and behavior can be unconventional to say the least, he probably needs to keep as much power as possible.
(1) a lot of retail investors loading into the stock & call options, primarily because it's a momentum hype/meme ticker with Elon at the helm, and easy access through Robinhood et al combined with stimulus money.
(2) large cap tech stocks have been rallying during COVID; capital has had nowhere else to go with the Fed crushing the USD and non-tech companies suffering,
(3) shorts have been repeatedly obliterated and are now mostly staying away. Short interest is now only 6%.
(4) TSLA was recently included in the S&P 500 at a ~1.5% weight, so index funds and ETFs have been forced to buy it due to a mandate to track the index.
A very interesting side story. Leon once tweeted that starlink has some risk of being shot down when flying over China. That's before Tesla got the Shanghai deal. And now, I could not find that tweet or any screenshot of that. I bet Leon spent some good money to make it disappear.
Can any fellow confirm my memory?
LE: Also, I don't really understand how people keep falling for this stuff. I have no doubt that some are very well aware that it's a bubble and just think they can time the crash correctly, but I see _a lot_ of people with incredibly bullish views on this. And to be honest, it's the same with Bitcoin.
I love Tesla but when even Musk himself looks at the stock price and tweets "LOL, stonks", you know something must be off.
Tesla's most valuable product definitely isn't anything made in a factory or produced by their programmers, it's the financial cult that has amassed around it. It's people who are putting every penny of their money on Tesla calls and spending every hour of their day making sure to spread the good news of Tesla and metaphorically stoning anyone who dares speak against Elon Musk.
This will almost certainly not end well at some point, especially since the valuation exceeds even a scenario where Tesla becomes a global monopoly in a number of industries. How long will it take for the cult to realize this? Maybe never.
That's an interesting take. Even if true today, does not reflect the historical reality at all; in fact I remember quite the opposite: for the majority of the history of the company I remember hearing that he is a clown, Tesla will go bankrupt, the product won't work, false stories on the product by major newspapers, the product won't make money, the factory won't scale.
So, in all, pretty accurate.
Elon will set foot on Mars and you’ll still have the delusional yelling Tesla is a farce I suppose.
It's not that surprising. The former is voicing an opinion. The latter is effectively just a pre-emptive insult to everyone who disagrees with you.
Similar arguments hold for any popular unpopular opinion.
Please correct/add if I am wrong/missing details. So far some things to be taken into consideration:
1. Investors
To be fair, Tesla received bad press before Cathy Wood's predictions came true and decimated all short sellers, leading to a short squeeze (major bull contributor)
- Car market: Stock price makes sense based on Ark's predictions, at least for now. Taking into account total addressable market (TAM) and market cap, Tesla's seeming monopoly with its 3-4 year lead on technology compared to all other competitors.
- It makes sense how investors are valuing Tesla to include all ICE companies, betting on Elon's probability to capture this market (Market cap -> TAM bet) This is not including additional speculative TAM (insurance, energy, self-driving, etc.).
Max bull case based on ARK's 7k prediction = 7k/5 (stock split) = 1.4k price target
- Governments are going to start banning ICEs by 2035. So the EV trend is definitely happening.
2. Consumers
- Product: Customers reviews and product seem solid. Value proposition to prospective new customers also make sense in terms of saving on gas long term compared to electricity.
- Hype: Yes, there is a cult around Elon, and defects or abuses get overlooked in favor of Tesla
Biased (shorts): https://news.ycombinator.com/item?id=25360432
- Supply: There might be a problem with cobalt supply due to its majority based on Democratic Republic of Congo. Ethical issues aside (child and forced labor)- One tesla contains ~4.5 kg of cobalt, compare this to global electronics' demand, there will be a big shortage (Glencore collaboration).
Elon is working with CATL do develop new batteries that get rid of cobalt, but this is a long shot, and even if realized, efficiency with a new tech is at stake.
- Demand: There is no doubt current market demand for EVs crossed an inflection point where consumer education is maturing due to Tesla. But most current customers are catered toward the rich (Boomers and Chinese).
- There is some research suggesting that millennials (Tesla's next biggest target) don't want to own a car (depreciating asset), let alone afford one- given current economic situation, home ownership (charging), and remote work. Tesla' promise on the $25k car might help here. But they are also the major fans and Robinhood investors in Tesla...
Not sure, overall I am glad that Tesla is forcing other companies to follow its lead, but a level headed approach is always good advice.
Note: I don't own a car or Tesla stock
- Tesla’s TAM: https://blog.nvstr.com/what-is-tam-and-why-is-it-critical-to...
- The “rich” buying Teslas also include tech and other high earning workers- including millennials (as exception to the demographic trend)
- Supply: Not only cobalt but chips shortage https://news.ycombinator.com/item?id=25686248
- Pandemic caused real state boom out of cities to suburbs and remote work trend might help Tesla (home charging).
Fear for public transport, for using gasoline stations and shared drives could change consumer EV ownership views
It's close to being a TRILLION dollar company. Think about it. It's so mindboggling. But then again, I felt that amazon was a gigantic bubble forever too.
I've said it before and I'll say it again: at this point tesla is going to be spectacular one way or another. It's been bid up to such an extreme degree that it can't tread water. So in 2030, we'll look back and be amazed at what Tesla has become no matter what.
It's a classic "there will be a greater fool down the road" theory, like the tech companies that proclaim they will never issue a dividend (in which case the only reason for buying the stock is that you believe someone else will buy it later).
The correction will be painful for all concerned. An overlarge market cap isn't really that great. Sure, for a while you can raise capital extremely cheaply and that's nothing to sneer at! But it leaves a couple of problems: when it's big it's harder for it to grow, while a smaller mkt cap leaves more room for growth. And people are buying growth. The other problem is that it traps the leadership. 20 years ago when Time Warner bought AoL there was much discussion in the press about the various business logic/synergies (or lack thereof) between the two businesses. But really the primary motivation seemed much simpler: the only way that Steve Case could retire (without cratering the stock price) was to sell/merge the company into another entity of at least similar size. Tesla can't merge with any car company, or many other companies for that matter.
As for the shorts:
A couple of years ago my kid worked for a billionaire with whom he remains friendly. The other day he joked to me, "My greatest respect for XXX is that he is the only person I know who has made money shorting Tesla"
I'd rather see who has the highest liquidity. Who is holding on to cash they could, right this minute, spend, or stocks they could freely sell without tanking their own companies? Not Musk, not Zuck, not Jeff... at least, not likely.
> I'd rather see who has the highest liquidity.
That would be interesting.
https://foreignpolicyi.org/vladimir-putins-net-worth/
I.e. is there anything someone with 200B can do that someone with "only" 50B can't?
Putin and the Saudi king are probably in a different category as they don't "just" have ultra-wealth, but also political power (as heads of countries), military at their disposal, etc.
But, say, between Jeff Bezos, Warren Buffet, Elon Musk, Bill Gates, et al? (I know they don't have all their wealth in cash, which might change things a bit. But still)
Perhaps my imagination is lacking?
Edit: Also, I wonder how long before the ultra-rich start spending in truly extravagant projects, besides just bigger boats. I would imagine that by now someone besides Elon would be designing/building their own personal space station or something like that..
Best way to be worth $1m. Create a company with an idea, find an investor and sell 1% for $10,000 and on paper you're worth $990,000. That money doesn't exist, just the $10,000.
I also think you’re extremely underestimating just how big these companies are. Jeff is liquidating ~1 billion a year just to fund his space company. Zuckerberg sold $280 million in 1 month in 2020 for walking around money.
No they can’t liquidate their entire position. They do have effectively almost unlimited financial reserves through multiple different channels. Said another way, they have $10s of billions in buying power even if they can’t access that entire wealth instantly as cash.
I'm geniunely curious.
Of course, probably just by virtue of being "friends" with other high net-worth individuals you will have access to financial vehicles that allow them to buy/invest without cash but I don't really know exactly how.
I cannot describe how many times I have heard the infamous "iT'S mOrE tHaN a cAr cOmPaNy"... All bark no bite, they sure as hell are not a major car company since they didn't manage to even deliver 500 000 vehicles this year ( "almost" 500 is not 500, especially since you have been promising 500 000 delivered cars for the last 6 years).
Still waiting to see how their "revolutionary" battery technology is going to look like, SolarCity was almost bankrupt, which is the reason Tesla had to buy them to save Elon's cousins...
They do got a shot at driverless technology, but the question is how big of a market is that, and how much are they going to own.. Waymo is also a danger in that field...
And in the end, Tesla has Elon Musk.
My pooper. Thanks for clarifying the timeline, that is something if true.
Like the Forbes list or the real richest person?
It’s particularly acute for me because I made a serious plan for my brother and me to put our entire inheritance on one stock intending to level our money up by an order of magnitude (6 figures to 7) and achieve financial independence. I chose TSLA in January 2018 as the stock with the highest probability of going up by an order of magnitude; we were looking for the best time to buy; I said in August 2018 that I thought a low of 200 was plausible, on a time scale of months, before going up to the hoped-for $650B market cap in a decade.
TSLA hit 200 in May 2019, nine months after I made that prediction. I was trying to avoid looking at the stock market to cut the risk of overreacting to trivia, and didn’t see it.
But my brother was watching, he saw TSLA hit 200 — and he didn’t say anything about it. We’d worked on this project for most of 2018, and then in 2019 my prediction, my only low price prediction, happened: and my partner in the project simply took no action. And we missed the whole thing completely.
Today, three years from the inaugural discussion of this strategy in January 2018, we would have $11,500,000 and our lives would be transformed. Putting our inheritance on TSLA aiming for an order-of-magnitude increase was my exact strategy. I made an uncannily perfect call of 200 (split-adjusted 40) as the lowest price we would see. My brother did not help me at all; and now every day I feel anger over this, I feel he lied to me about his support for our joint project, he has no sensible explanation for his lack of action (“I thought you probably already knew” and even less sensible excuses).
Financial losses on the stock market can cause lots of hard feelings, and missed opportunities can too. How does one cope with this?
And you never know if you would have sold earlier. Like all people saying "wish I bought bitcoin back then I would be so rich now!". No, you wouldn't. You would have cashed out when that $1k was $10k, not daring hold to $1M.
The evidence confirms the the accuracy of my predictions. It’s not empirical to brush aside evidence because it’s inconsistent with your prior. If you don’t sharply revise your prior with new evidence, it might be that your P(X | ~A) term is too large. You might be overestimating the probability that I would be right when your prior said it was a stupid idea. Instead it might be very unlikely for me to pick the best stock out of 3000 when you don’t think it’s possible for me to do that, so your idea that it’s not possible for me to do that is off. Your prior was off, and if you’re a Bayesian you now need to update your prior sharply.
My argument, expressed repeatedly to my brother over the course of 2018, was that the American stock market regularly turns up stocks that increase by an order of magnitude or two, and in a subset of cases it’s reasonably possible to spot that ahead of time.
Pop quiz: name 3 stocks that have gone up by an order of magnitude, over any time frame in history. Pretty much anyone familiar with stocks could do this. Follow-up, out of those, name one where you think you could reasonably have predicted it in time to invest. Most people will readily come up with one where, yeah, reasonably, you could tell at the time.
My strategy was based on taking these facts seriously. It was further based on the observation that it’s easier to make one good decision than five or ten. My brother’s and my situation with an inheritance, where the money was not committed, where we could afford to lose it without dying, gave us an opportunity to make one good decision and thus end all personal financial concerns forever.
> If you had invested and lost it all, how would your brother have treated you?
We discussed that contingency. If we’d invested it all and lost, my brother had a solid backup plan where he’d be okay, and I did as well. This inheritance was available to invest.
> Why blame and be angry on him?
My brother repeatedly expressed his support for this plan. I blame and am angry because he consistently expressed support for this plan through most of 2018, then failed to act in 2019 when he needed to take concrete action in support of the plan.
> And you never know if you would have sold earlier. Like all people saying "wish I bought bitcoin back then I would be so rich now!". No, you wouldn't. You would have cashed out when that $1k was $10k, not daring hold to $1M.
The stated plan was to hold to a pre-split price of 3800 or 6000, based on Elon Musk’s commitments to meet specific market cap goals laid out in his 2018 compensation package. We were prepared to hold til 2028. TSLA is now at a pre-split price of 4400, in the range of our goal price, so we’d now be trying to figure out the exact right time to sell.
This was a difficult project. After two serious runs at buying TSLA in 2018, where we got to the brink and then backed off, I made a strategic mistake. I was concerned about the risk of me overreacting to trivial events, so I restricted my intake of stock market information to reduce that risk. My mistake was, I put in too heavy of a filter.
My mistake is what created the opportunity for my brother to substantively contribute. He could have ridden to the rescue of our joint project by mentioning it to me when TSLA hit 200. I had repeatedly opined in August 2018 that it seemed possible for TSLA to fall as low as 200 before climbing to the hoped-for 3800 or 6000 in a decade. My brother saw TSLA hit 200 in May 2019, but he didn’t see fit to mention it.
> Your brother sounds like he wasn't really on board with the plan,
Yes, in hindsight, you’re right that my brother wasn’t really on board with the plan. All I can say is that he gave every indication that he _was_ on board. It appears to me that he lied in my face. This speaks to family issues that aren’t going to be of interest to HN so I’ll say no more, except to note that missed investment opportunities are a thing that can foreground classic human problems.
> which is the prudent, sensible course of action.
Bold action when opportunity presents is a component of that, in a broader view.
I am quite interested in his techniques, and am guessing so do a lot of founder wannabes.
What to believe?