Have you ever come across someone who believes they’re smarter than they really are?
Of course you have.
Most people tend to think highly of themselves.
Ask someone their IQ. I bet most people will tell you it’s 10 points higher than the reality.
Elon Musk strikes me as one of these people.
He is extremely smart and well accomplished.
I would not be surprised if he had an IQ of 160.
I also wouldn’t be surprised if he thought he had an IQ of 170.
That kind of bravado will get you killed in the investment game.
Jumping into almost any investment is fraught with uncertainty and unknowns. Heck, it’s hard to even understand what might happen to simple businesses most of the time.
It would be investment suicide to think you know more than you actually do. When most investors think they know something, they believe they know it 100%.
In reality they probably know it 60%, at best.
It’s why the game of investing is extremely humbling. You cannot explain your way out of losses. You cannot blame your mistakes on someone else.
Your returns (over long periods of time) speak for themselves.
Maybe we should give Elon a few thousand and push him into the market.
It might make him settle down a bit…
Elon is at it again
It’s that time of the year. Management show their operating results and give predictions of what could come next.
Musk was no exception. He tweeted that Tesla’s production would reach about 500,000 in 2019.
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According to the Australian Financial Review (AFR), Musk then had to revise his earlier estimates hours later.
‘Musk said Tesla still forecasts deliveries of about 400,000 vehicles this year.’
I guess that’s how you get the people excited. Talk your book like crazy. Then, slowly revise things down.
Then again, deliveries are not the same as production.
Tesla might produce 100,000 more vehicles than they actually delivered within the year.
The AFR continues:
‘In a letter to shareholders, chief executive officer Musk and his chief financial officer forecast as many as 400,000 total vehicle deliveries this year. Within hours, the CEO told an analyst on Tesla’s earnings call to expect sales for just the Model 3 to reach as many as 500,000 units in 2019.’
Maybe it was just a mistake, a Freudian slip.
Or maybe the mainstream has nothing better to talk about.
They’re watching Elon and Trump’s Twitter accounts like hawks, looking for anything to latch onto.
It’s not as if Musk has never released information that wasn’t entirely factual before.
Back in August, Musk said he had ‘funding secured’ to take the company private.
The stock price shot up. Investors were happy. Problem was, funding was not secured.
‘The US Securities and Exchange Commission moved to punish Tesla and Musk…Both he and the company agreed to pay $US20 million in penalties, and Tesla said it would implement controls to oversee the tweeting and other communications of its outspoken chief,’ the AFR writes.
If you remember yesterday, I told you to fish in the uncrowded waters.
It would be silly to try and compete with million- and billion-dollar funds, packed with teams of specialised analysts, spending hours looking at specific pockets of the market.
Even though most of these ‘experts’ have terrible long-term performances, it’s still not an easy game to win.
That’s why I suggested you fish in the calmer waters, where the fish are plentiful and there’s no big fundies stomping around.
I’m talking about the smaller end of the market.
Well, dear reader, here’s another tip.
Be very sceptical of the mainstream and the pictures they paint.
In fact, be sceptical of anything you read, from anyone.
With so much information and opinions at your fingertips, you really need to do your own research on top of whatever it is you read.
That way you can form your own conclusions, instead of adopting someone else’s.
The other day in the AFR, for example, one article was playing down Chinese demand for Aussie goods. The next day, there was another article pumping up Chinese demand for Aussie goods.
Which do you believe? Which one is going to help form your investing outlook?
A platform for ideas, not biases
This is why I believe so strongly in doing your own research.
That doesn’t mean you can’t look at other opinions and writings. But you should not completely take on the authors’ views without looking at the evidence yourself.
If you don’t, you’ll be taking on their biases too.
Most of the stuff you read out there in the mainstream is biased, either because of the institution’s views or those of the author.
Even your friendly editor has his own biases (which I’ll try to point out whenever I can).
It’s why we’ve tried to make Money Morning a platform for ideas, rather than a platform to spout biases news.
Our editors here at Money Morning spend hours, sometimes weeks, researching investment ideas to present to you here.
Whether you, dear reader, like and buy into those ideas or not is completely up to you.
As it so happens, we have a new investment idea.
This one’s from our very own Ryan Dinse.
Ryan heads the private advisory service, Exponential Stock Investor, which aims to jump on Aussie small-caps profiting from exponential trends.
I don’t want to give too much away, but the new trend Ryan’s following could play a foundational role in the roll-out of electric vehicles.
No, it’s not Tesla Inc [NASDAQ:TSLA].
Ryan will tell you all about it on Tuesday.
Editor, Money Morning
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