It took me two years to change my mind about Tesla.
I didn’t invest in it. And it wasn’t the price going up that kept me from investing. It wasn’t the production delays. It wasn’t the sky-high market value. Not, it was this.
Why I Didn’t Invest in Tesla
A couple of years ago, I thought about investing in Tesla even though I heard about how expensive it was and how there were so many shorters shorting the stock (which means people were betting that Tesla’s stock price would go down). But I didn’t.
Right around the time I was thinking about the company that makes those sexy electric vehicles rolling that everyone wanted, I heard a podcast that changed everything. I don’t remember the interviewee’s name. But I do remember what he said: He was convinced that Tesla was a fraud and that it would go down and he was certain.
And you know what it did to me? It scared the crap out me and I didn’t invest.
The stock has gone up over 800% from just last year. And I missed one of the greatest investment opportunities to bet on one of the most innovative entrepreneurs ever to live.
See, that’s the thing about negative stories: They’re so believable. No one wants to look stupid and buy a loser or make a mistake, and, certainly, everyone hates losing money. And when you see a stock that seems too good to be true, and then you hear an “expert” say that it’s a fraud, that sticks with you. The thing about a story is that they are sticky.
But eventually, I got unstuck.
Looking at Tesla Afresh
So, what changed my mind? It was the Gigafactory that came online in Shanghai. I saw a headline on it and it shook something inside of me and made me question my stance against Tesla. And I started to trace the reasons why I didn’t invest in it and I remembered the podcast.
After I realized how much I let that podcast affect me,
I started to think and look at Tesla afresh. I saw that it was the premier electric vehicle company, led by one of the greatest entrepreneurs ever. And I feel a little uncomfortable using such superlatives, but I don’t think I’m exaggerating.
It’s vertically integrated, trying to control the whole production and manufacturing stack. That sets it apart from American auto manufacturers. Tesla can control its quality and destiny for years, decades to come. And that’s not even mentioning that Elon Musk did what most people thought was impossible: He created another American mass-production auto manufacturer, which hasn’t been done in a century.
See, that’s the thing about a company like Tesla, when you talk about its accomplishments, it does sound like exaggerations, a string of superlatives that almost seem too good to be true.
But that’s because Tesla is superlative. It’s so great, it feels too good to be true.
The Foolishness in Investing
And that’s the thing about investing: you’ve got to be foolish enough to bet on the it’ s-too-good-to-be-true-investments because that’s where the real growth is. See, it’s tough to be a great investor and be pessimistic. You need to be optimistic to bet on the companies that will innovate and change the world. It’s those moonshot companies that do that thing that everyone says “can’t be done,” because it’s too hard or no one has ever done it or whatever. But they give us the best returns.
That’s Tesla. They’ve done the impossible. They’ve built the next American automotive manufacturer; they’ve scaled their business; they’ve become profitable. They’re beating the odds. Optimism often wins.
Yes, price matters. You need to invest at the right price. But how do you price a unique item like a rare gem, or a Van Gogh water lily painting, or a company that’s not like any other? That’s the problem here, with Tesla. It’s not like many, or really any, other company. That doesn’t mean it will hold its price or there won’t be volatility or drawdowns. No, there will be. But that doesn’t mean that ten years from now it won’t be more valuable. So I don’t have a great answer for the pricing; it’s a conundrum.
Closing Thoughts on Tesla
But ten years from now, I do think Tesla, as a company, will be worth far more than it is now. It will possess all of that institutional knowledge, expertise, grit, scale, technologies, and innovative culture. And how much harder will it be for another manufacturer to catch up to them? Sure, one, let’s say a Chinese manufacturer, will have a lot of those qualities, but it’s unlikely they’ll have the quality and the mystique that Tesla has. I doubt they will have the magic. Tesla doesn’t just make cars. They make art on wheels.
And then it’s not hard to think about the future and wonder who will catch up to Tesla? If it was that hard to create a mass car manufacturer, which no one has done for over a century, how will anyone create one that will compete with Tesla? Because they didn’t just make a company and build a manufacturer that makes good cars; they created one that makes great cars, ones that people die for, lust after, aspire to. Musk didn’t just build the impossible, a new auto manufacturer; he also created a timeless brand.
So, yeah, I thought to myself about myself, “You’re an idiot for listening to someone else and not investing in one of the most iconic brands that accomplished the impossible and created one of the most desired products ever.”
That’s the story I believe now.
So I invested. It happened about two weeks ago.
I’m up 3%.