30-01-2020, 08:45 PM
That's an interesting story.
There are people who make investment decision solely based on numbers alone. The strategy of owning many companies, with sensible numbers, at cheap prices has worked for some people. But it does not work if there is no diversification. Because qualitative factors are not taken into consideration, the investor does not have a fuller picture of the company. For instance, he may unknowingly be buying a saddle maker in a world where the number of horses are shrinking.
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It is often said that there are many ways to make money in financial markets.
This is true. Because if investors only want to buy companies with nice numbers and at cheap prices, then Tesla will not be trading at where it currently is.
A 'punter/speculator' would have made money on Tesla -- or other in-fashion tech companies -- just by anticipating what kind of stocks the market will find exciting. Its the same thing that scalpers and HFT traders do; being ahead of the buying crowd and re-selling at a higher price.
Alas, what would one have to do to know what the next 'hot' stock will be?
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Car manufacturing is very competitive with many brands and players. Whatever kind of car Tesla is producing, its better-equipped competitors will likely offer something similar, if not better. Nissan has its all-electric Leaf for years.
Car manufacturing isn't like software technology where the most efficient, most user-friendly, bug-free, etc can dominate the market. It costs next to nothing to duplicate a software, but millions and billions to produce cars. The heavy capital expenditure to develop and manufacture cars is part of the reason why automakers tend to get into serious trouble during recessions.
While Tesla is likely to be treated seriously by its competitors, my guess is that it will at best share a fraction of the market with the incumbents.
There are people who make investment decision solely based on numbers alone. The strategy of owning many companies, with sensible numbers, at cheap prices has worked for some people. But it does not work if there is no diversification. Because qualitative factors are not taken into consideration, the investor does not have a fuller picture of the company. For instance, he may unknowingly be buying a saddle maker in a world where the number of horses are shrinking.
===
It is often said that there are many ways to make money in financial markets.
This is true. Because if investors only want to buy companies with nice numbers and at cheap prices, then Tesla will not be trading at where it currently is.
A 'punter/speculator' would have made money on Tesla -- or other in-fashion tech companies -- just by anticipating what kind of stocks the market will find exciting. Its the same thing that scalpers and HFT traders do; being ahead of the buying crowd and re-selling at a higher price.
Alas, what would one have to do to know what the next 'hot' stock will be?
===
Car manufacturing is very competitive with many brands and players. Whatever kind of car Tesla is producing, its better-equipped competitors will likely offer something similar, if not better. Nissan has its all-electric Leaf for years.
Car manufacturing isn't like software technology where the most efficient, most user-friendly, bug-free, etc can dominate the market. It costs next to nothing to duplicate a software, but millions and billions to produce cars. The heavy capital expenditure to develop and manufacture cars is part of the reason why automakers tend to get into serious trouble during recessions.
While Tesla is likely to be treated seriously by its competitors, my guess is that it will at best share a fraction of the market with the incumbents.