I am going to invest in Tesla now. Definitely. Pretty sure. Well, I guess I should. Maybe I wait a little longer to see where this is going….
Sound Familiar? Not the Tesla bit, but the agonizing investment decision I am about to face.
I have gone through the same process several times over the years and each and every time I missed an incredible investment opportunity. Let me elaborate. As a young trader in the City I witnessed the first non-bricklike mobile phones hitting the high street. Not the massive two-arm lift monstrosities of the eighties but the rather awesome, flashy high tech Nokia and Ericsson devices. Of course, I had to have one.
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I am going to invest in Tesla now. Definitely. Pretty sure. Well, I guess I should. Maybe I wait a little longer to see where this is going….
Sound Familiar? Not the Tesla bit, but the agonizing investment decision I am about to face.
I have gone through the same process several times over the years and each and every time I missed an incredible investment opportunity. Let me elaborate. As a young trader in the City I witnessed the first non-bricklike mobile phones hitting the high street. Not the massive two-arm lift monstrosities of the eighties but the rather awesome, flashy high tech Nokia and Ericsson devices. Of course, I had to have one.
So the moment I was able to shell out half my monthly salary and stopped bothering about the monthly huge fixed fees I was getting into, I became the proud owner of a Nokia 2210. So were almost all of my peers. Then their spouses and friends and eventually a bit further down the line my mom, my dad and pretty much every teenager. What used to be a luxury item became a utility and Nokia, Ericson, Motorola etc. were coining it, while their stock prices went skywards. It became such a part of everybody’s daily life that the idea of not ever sitting on my flashy new Apple computer ordering books on Amazon while chatting away on my mobile is barely imaginable today.
You see where this is going? My totally average mainstream taste and my Mr. Average upbringing, paired with my craving for products with mass appeal allowed me to identify not just one but several mega trends in the making. Yet, the high volatility of the companies that provided these desirable goodies made me hesitant to put my investment money where my play money already was.
Maybe that’s what being a derivatives trader for a living does to you. Volatility can be a scary thing. As a market maker you usually have to buy it when its low and getting lower or sell it when its high and getting higher. I tended to stick with the classic wealth building stocks like the shares of the firms I was working for at the time, feeling secure that my Bear Stearns shares would provide me with a nice nest egg for retirement. But that’s another story.
Coming back to Tesla I am currently facing the same dilemma. My car is getting a bit old right now and with the German government, the country I am residing in currently, becoming increasingly finickity about cars that do not run on ambrosia or holy water, the prospect to upgrade on a “Knight Rider” like transport is very tempting.
Also, I am not the only one thinking like this. The product, the e-car, is getting increasingly better with a wider range, less maintenance and decreasing prices. Potential customers, average guys like me, are sniffing around showrooms and seem to have started counting their savings. Never mind the fact that environmentally conscious drivers, who bought for exactly that reason a diesel engine and are now being hunted down like stray dogs, will very likely opt for the hybrid or fully electric choice and Tesla is the “Big Daddy” in this market.
Of course, the traditional car makers are ploughing investment into the development of new e-vehicles too but for my taste it feels as if they are haunted by their existing product line. You don`t stop feeding your first born just because there is a second child on the way. Tesla does not have this problem, it can exclusively focus on a new technology with everything that this entangles, from production facilities to supply chain management. Plus, they do have Elon Musk. As a massive shareholder, he has substantial skin in the game, is an accomplished showman, knows his stuff and the occasional interviews about sleep deprivation or smoking pot on television do not bother me too much, as long as he doesn’t have a heroin induced seizure on CNBC primetime.
Yes, the volatility in Tesla shares is incredibly high, but with the most short-sold, high tech company in the world this is not that surprising. What matters is that I really, really want his product and will probably soon smugly be driving around in one – the Cybertruck – saving the planet in style. This time I will not forget to gobble up some stock in the firm whose product I am buying, or so I thought. I’m just waiting for the correction. Alas, I’m stuck with the immortal words Johan Wolfgang von Goethe put into his protagonist Faust’s mouth: “Two souls, alas, are housed within my breast, and each will wrestle for the mastery there.”
Thorsten Roland Wegener spent twenty years trading equity derivatives and was a partner at Bear Stearns. Currently, he teaches as well as cooking, driving, and cleaning lots.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)