- In order to justify current market valuations, Tesla should increase car sales at least 12-fold, but there aren’t any sell recommendations for the company.
- GM has a market capitalization per vehicle sold that is 79 times lower than Tesla’s.
- Analysts are extremely exuberant about the market and are misleading investors. A better risk reward model is necessary in order to prevent tragic investment situations.
As we are in the eighth year of this wonderful bull market, investors, analysts, and asset managers spend much more time analyzing potential rewards than analyzing risk because we easily forget to think about risk which is in opposition to Warren Buffet’s first and second rule of investing:
“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”
Not losing money means we should spend more time analyzing risk than we should on analyzing potential future investment rewards. Unfortunately, this is neither fun nor cool, and demands high levels of discipline, a very cyclical and long term perspective on investing with strong self-awareness, and confidence in what you’re doing so as to not just follow the crowd. More →