That Trillionaire Elon Musk

Is Elon Musk a trillionaire? No, he isn't. The trillion dollar value people put on him is derived from his stock holdings, multiplied by the current value of those shares. A company may have a large market cap, but not be making a profit. Oh wait, that's SpaceX. 

Elon Musk cannot simply sell his shares and bank a trillion. In theory he can, but in reality if he put his shares on the market, the market as a whole would tank and he'd end up getting cents on the dollar. 

There are different ways of looking at this, I realise that, and there is no doubt Elon Musk deserves to be a billionaire off the back of Starlink alone. But beyond that, Musk's ventures are foolish, mostly flimflam. Look at the list; Tesla is the worst car ever made, SpaceX rockets blow up often, the boring company wasn't any kind of new idea, that hyper loop was stupid. Paypal leaves me wondering why people use that platform, I checked it out once and found that you basically give your money to them and they decide whether you can access it - not like a bank which rarely behaves like that. Twitter has always been a US government operation, governments have backdoors through which they monitor people. 

I look at Elon Musk as performance art. PT Barnum was the greatest and remains so.

Tesla Tanking

Thus far this year, Tesla's share price is down 41%. In the last few days, and since I called for people not to buy Tesla cars, and/or not do business with anyone who owns a Tesla, Tesla's market capitalisation has lost almost $200 billion. Way to go, let's keep that trend going, clearly a lot of people out there are thinking the same way.

In related news, Elon Musk and his DOGE team are said to be causing chaos with staff running social security. They're letting people go in a haphazard manner.

Efficiency gains are always desirable, but the way Musk and his minions are going about it has the appearance of causing intentional harm.

Female Business

Women come up with some really good products and are often behind very good businesses. Another of my favorite stock picks is Waldencast (NasdaqCM - WALD), a startup cosmetics company making all the right moves. One of its founders is Ms Hind Sebti. She's originally from Morocco and holds a masters in industrial engineering from INSA Lyon in France. Her background includes roles at Procter & Gamble and L'Oreal.

You may not have heard of Waldencast, but if following the beauty industry you'll have heard of Milk Makeup. They promote their products using influencers on platforms such as YouTube. 

Waldencast's investor page can be found here: https://ir.waldencast.com

The company also has Waldencast Ventures, which incubates and accelerates beauty brands. One of these is Whind, brought to the company by Ms Hebti herself. Here is a link to Whind: https://whind.com/en-row They match makeup to darker skin tones, and embody a look that enhances what we used to call the exotic look. 

SEC Settlement with Musk

In the settlement with Elon Musk, the SEC has arranged some adult supervision for the now former chairman of Tesla. Good.

https://www.marketwatch.com/story/sec-settlement-forces-tesla-to-find-elon-musk-some-adult-supervision-2018-09-29

SEC Goes After Elon Musk

Great news, the SEC is going after Elon Musk

https://www.usatoday.com/story/money/2018/09/27/sec-charges-elon-musk-tesla-over-tweets-take-company-private/1447172002/

As readers of my blog will have observed, I think Musk is something of a joke. I wouldn't trust him with a fountain pen, let alone a large company.

See also;

https://kenhorlor.blogspot.com/2018/08/azealia-banks-busts-elon-musk.html

https://kenhorlor.blogspot.com/2017/11/elon-musks-electric-truck.html

https://kenhorlor.blogspot.com/2016/01/tesla-cars-bad-customer-service.html

Crash 2018

Only a month ago I said that I was negative for 2018 and I told you why.

>> See Here <<

Now we have a crash across all stock markets. It was to be expected. Too much uncertainty exists in the global arena, and too much wealth concentrated in a few hands. Plus we have not had structurally meaningful reforms to economies. All that happened post the GFC was bail outs and doubling down. Inefficiency and incompetence was rewarded.

For the value investor, right now is a golden opportunity. Have you been a frugal investor and kept your cash in the bank? Yes? The next few weeks is the time to venture out and begin looking for bargains. Study my portfolio from the following site;

http://www.siliconinvestor.com/portfolio.aspx?fid=521

My suggestion is to look for companies that everyone else thinks are too boring for words. If your neighbours have never heard of them, then maybe that's a good thing and you should check them out - the company that is, not your neighbours.

[Update @ 03/04/2019 - this portfolio is still ahead 28% despite the 2020 COVID-19 Crisis. That's testament to conservative investment strategy. The real crash wasn't 2018, but 2020, but with my strategy it doesn't matter ]

DIY Investing

Back in June I picked PACCAR Inc., here: http://kenhorlor.blogspot.com/2017/06/paccar-inc.html

Had my readers taken heed and invested, their investment would be up 16%. Check out my portfolio: http://www.siliconinvestor.com/portfolio.aspx?fid=521

What I say is this: take your own counsel and buy shares directly through a broker. Do not buy into funds, or funds of funds, and eschew financial advice from so-called professionals. All that happens when following investment advisers and funds is they'll take away most of the gains in fees. Do It Yourself, be conservative and look for value.

Portfolio Performance

It's been a year since I posted my portfolio on this blog. As a whole the portfolio is up 54%, with Oshkosh up 107%. Two other favourites of mine, Trinity Industries and Caterpillar are also up more than 70%.  If you want more picks like these then I suggest my readers subscribe to the Stock Tip Hotline.

Check out the portfolio here http://www.siliconinvestor.com/portfolio.aspx?fid=521

Stock Tip Hotline explained here http://kenhorlor.blogspot.com/p/stock-tip-hotline_18.html

We are investing now as well, so if you've got a good business to sell, let me know. Even if it doesn't meet our strict requirements, we may offer the business on our blog to our very wide readership.

Investing now explained here http://kenhorlor.blogspot.com/p/investment.html

Three or more Essential Reads for Investors

If you read nothing else in relation to investing then these are my picks, in order of importance, read them in numerical order:-

1. The Intelligent Investor by Benjamin Graham.

Get the edition with a forward by Warren Buffet and annotated by Jason Zweig. It is a timeless classic full of practical advice. You may have heard of it and discounted simply because it isn't trendy, or some such, well don't, the book is as good as people say. Follow the advice and you'll rarely go wrong.

2. Common Stocks and Uncommon Profits by Philip A Fisher.

The 'father' of growth investing, Fisher follows the 'scuttlebutt' approach. Find a good business and learn about it, check it out in the flesh, how is it run, is this a good business is it? Of course you don't believe rumour and all that crap, but there are things to take notice of and Fisher tells you how. Ben Graham references Fisher and points out how talented he is, and so the readers of both should take note; follow Graham for soundness and when your skill improves or you're very talented, then you may graduate to Fisher.The truth lies somewhere in the middle, be a Ben Graham type with room for some of Fisher in there somewhere.

Special note here for Peter Lynch's Beating the Street; it is a very valuable book too and could be read in conjunction with 'Common Stocks', it shows how keeping it simple can be a real winner. I only add it as a mention as you don't have to read it if you've got 'Common Stocks' on hand.

3. Freakanomics by Steven Levitt and Stephen Dubner

This will make you think about everything. Basically, if you provide the incentives, you will get it, even if you didn't intend to.

Special note: for the real estate fanatics an often overlooked book that is the first and last word on investing in real estate: Jones on Property by Bob Jones. The short message is; there is glamour in industrial. This book covers everything any real estate investor needs to know. It was published in 1977 in New Zealand and covers that market and Sydney Australia. The author is a successful investor, now Sir Robert Jones.

Head over to the forum to discuss the best investment reads.

My 3 Rules for Stock Market Investment

Boiled down I have three broad rules related to stock market investment.

1. Boring is best

If the industry is out of date, no-one wants to know about it any more, isn't sexy, isn't highly technological, people laugh if you mention it or better still, have never heard of it and have no idea what it does exactly, then I'm interested in it.

2. Don't pay too much

That great company may be the bees knees, have great management, reasonable debt levels and has been making solid profits for a hundred years; but if it's over-priced it's still a no go.

3. It must be solid

The company must be respected, well managed, have a dominant position within its market, have brands that resonate, and been around quite a while.

My advice: take your own advice and use these three rules, then you'll likely do better than any investment adviser. Want a snapshot of how good returns can be? Check this out >>Do Not Click Here<< Nah, go on you can click it, what it shows is that by applying my three rules you can achieve better than a 40% return in less than a year.

To discuss please visit the forum. Your ideas are valued.

Apple Inc

Is Apple Inc down and out? If you only read the responses to their latest earnings report then you'd be excused for thinking they were.

Check this out - the stock price for Apple Inc at the close of business Friday May 4, 2001 was $1.84. The price on May 4 2016 was $94.19. 

10,000 shares bought at 1.84 = $18,400

10,000 shares sold at 94.19 = $941,900

That's a capital gain of $923,500. I think you'll agree, a pretty nice return.

Naysayers can be found everywhere. They're often wrong. Apple was thought to have peaked in 2012. Their price then was $80.75.

Now I'm not guaranteeing staggering returns like these. But pick a good company and by sticking with it, you can do a lot better than with real estate or any other form of investment for that matter.

Check This Out

Check out this portfolio (see new adjustments), it may just impress. Not even a year has past and this portfolio is up more than 50%. The trick is to think old fashioned. Do you jump on all the latest bandwagons? Well don't, they almost always lose money. Are you excited by dirty metal bashing industries? Great, think like that. 

Here it is...http://www.siliconinvestor.com/portfolio.aspx?fid=521

Look at Trinity Industries, up over 70%. Caterpillar up 55%. Oshkosh up over 100%. You never hear people banging on about how great these companies are do you. Think margin of safety, I believe Trinity offers margin of safety based on its relatively cheap price compared to its peers. 

Update (@27/06/2017): I have adjusted the portfolio and decided to take most of my Caterpillar gains and invest those in Paccar which appears cheap for such a great company right now. My thinking here is that Caterpillar's restructuring will take some time while Paccar represents quality truck brands, and Paccar is still making money. I'm selling half of my Caterpillar shares, those that remain represent the bulk of what the 1,000 original shares cost in the first place. Think about that for a minute.....18 months after purchase, they've just about paid themselves off and I can go after another great company. Note that the performance of the whole portfolio now drops after this new position is taken, but the whole has grown by the gain made on sale from the Caterpillar sale. And think, where I'm based this capital gain is tax free.

Update (@13/08/2018): Note this portfolio is doing very well. If you check in from time to time you will see that each stock fluctuates, but over time they all do well. That's because they're conservative picks, run cautiously and adroitly. They're not the next big thing, which usually crashes soon enough.

Update (@2/09/2019): I have one bad performer, FreightCar America Inc., but we don't go along with selling in a panic, we're sticking with it.

Update (@20/03/2020): The markets have been severely impacted by the COVID-19 crisis, but this portfolio is still ahead, up 12.7% since inception. The lesson; hold conservative value stock like these. Caterpillar is still up 59%, Federal Signal by 102%.

(Note: These opinions are information only and do not constitute investment advice. If you need investment advice on these stocks or anything else for that matter, talk to your recognised and professional investment adviser. Better still, do your own research and act on it confident in your own ability.)