Why I Invest in Tesla

10 08 2011

The “investment experts” hate on Tesla Motors quite frequently. Every quarter since the stock launched, I’ve read the death knell articles. “Here comes the slide,” they normally say.  Here is one of my recent favorites: Buy The Car, Avoid The Stock. I feel like Paul Graham’s oldie but goodie applies here: Return of the Mac.

I have remained steadfast in my support (purchased a decent amount of stock just after the lockout period ended). I originally wrote a far more detailed post to explain my feelings, but after this recent stock market insanity, things need to be boiled down (the numbers don’t really make a lot of sense right now).  In any case, here is my investment philosophy here:

First, I’m investing from a long-term perspective. Most of these investment experts are coming at it from a more short-term view (here was one of my favorites: “buy the car, sell the stock”. As a long-termer, that has me excited to buy!). I’m not expecting to make money quickly, but I think over the long-haul my returns will be superior to holding Ford or GM.

We will continue to demand vehicles for a long time. Sooner or later, we must fully abandon fossil fuel-powered cars. Tesla is one of the few that is actually built for “the new way” (see, didn’t expect any “Wet Hot American Summer” references when you started reading, did you).

I take the Warren Buffet approach and imagine that I have the opportunity to buy the whole company. So I call them all into my office (I have an office in this scenario).  A few of them have deeper pockets, but are only willing to sink a small percentage of their total worth into this electric car future. These companies have grown fairly complacent, fairly lazy, and fairly distanced from the end consumer. Then imagine a young, whip-smart and driven Tesla motors striding into my office. Yes, they are flying by the seat of their pants, but they are going for it all the way. And this isn’t their first rodeo, either. They’ve demonstrated perserverance and the ability to generate traction too. Who are you going to invest in?

Note: I am not an investment professional, nor do I pretend to be one in this blog. I certainly haven’t sunk a huge percentage of my net worth into Tesla, and I’m not recommending anyone else to, either. But if you’re willing to put make one risky investment in your portfolio, Tesla is my bet.

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