If you’ve read this blog for any length of time, you know that I talk about Tesla frequently. I got lucky purchasing the stock on a whim in 2012 for $1.93 (split-adjusted). Tesla had a tremendous run up, but the stock hasn’t been doing so hot lately. The stock hit $407 back in November of 2021 and has since crashed down to $163. Oof:
Tesla is an interesting company to follow. By 2030, I think that each of these scenarios are possible:
- Tesla will be the most valuable company on earth as the world moves to EVs and renewable energy (remember that Tesla makes more than cars).
- Tesla will be gone. Competition from China (or some unexpected circumstance) will destroy it.
The most likely scenario is somewhere in the middle. But this post isn’t about Tesla. If you want to know what I think about the state of the company, scroll to the bottom.
VTSAX Won’t Go To Zero
Here are some interesting facts:
- As of 2020, the average lifespan of a company in the S&P 500 was 21 years and this is decreasing.
- Only 1 out of every 200 companies last 100 years.
- You will probably live much longer than most companies.
So, if you own individual stocks, you must accept the following:
- Most of your holdings will go to $0 in your lifetime.
- Because of the quickening pace of tech, the lifespan of companies is decreasing.
- It’s very difficult to tell when your company has peaked. It cracks me up when I see very smart people with terrible ideas. See Steve Ballmer’s initial take on the iPhone.
- It’s very difficult to predict how your company will die. Most of the time, you’ll only figure it out when it’s too late. One real-time example may be Japanese auto companies who have been to slow to embrace electrification.
- Reinvention is VERY difficult. Microsoft and Apple were able to bounce back. See Satya Nadella and the iPhone respectively. Most companies can’t/ don’t/ won’t do this; they just fade away. For a real-time example of a company trying to reinvent itself, see Mark Zuckerberg.
- While most of your stocks will go to $0, VTSAX won’t.
An index fund isn’t sexy, but it’s passive and effective. You don’t have to worry about when (insert your favorite stock here) has peaked. The index is self-cleansing. The winners grow bigger (Apple is 6% of VTSAX!) and the losers will fall away.
I picked stocks and actively managed funds before I knew what an index fund was. While I still own stocks, a basket of index funds now make up the majority of my portfolio. When my syndication deals close, I’ll reinvest the money into VTSAX. When Mindy quits working and capital gains become less of an issue, I’ll sell the stocks and put the funds into VTSAX.
I hope y’all are holding up well. 2022 was a crazy year. 2023 may be more of the same. But eventually, the tide will revert and Mrs. Market will continue her trajectory; up and to the right.
More 1500 Days!!!
You can also find me (and the dinosaurs) at:
- Facebook: Facebook group and page
- YouTube: My channel is mostly devoted to home improvement, but I have some other material coming up soon too.
- Instagram: Pretty pictures of dinosaurs, sunsets, and nail guns!
- Twitter: Spontaneous, often insane, ramblings
- Coworking space: On the surface, MMM HQ is a coworking space. Look a little deeper and you’ll see that we’re really building community. The members of MMM HQ are some of the finest people I know.
*Random Thoughts On Tesla
Elon Musk: I wish he’d just shut up and focus on engineering problems.
My Tesla order: I talked about ordering a Tesla back in August. I’ve since canceled my order. It just doesn’t feel good to spend that kind of money right now. Also, I wanted to buy a Tesla to track FSD progress, but I don’t see evidence that Tesla will achieve Level 4 autonomy before mid-decade, so I’m not nearly as excited about owning one. Musk is either delusional or lying when he makes FSD promises.
4680 batteries: This is one of the most important initiatives for Tesla and it’s woefully behind. I’m not sure what happened here, but Tesla’s end of 2022 4680 battery production is 4% of where Musk predicted it would be on Battery Day.
FSD: Musk has stated that Tesla will be worthless without autonomy. I believe this. Why own a car when it’s far cheaper to have a robot drive you around at a fraction of the price? GM and Waymo are already operating small scale Level 4 fleets. Meanwhile, Tesla is still at least a couple of years off from achieving the same feat. I hear Tesla fanboys state that GM and Waymos’ strategy is expensive (LIDAR sensors) and fragile (requires detailed maps). Regarding the former, LIDAR will come down in price like all tech does. Regarding the latter, the fleet cars themselves will be able to update maps. Now, Tesla’s approach is much more flexible and scalable, but it’s difficult to predict when the cars will be able to operate independent of a human.
Tesla is also doing a lot of things right: Despite being delayed at least 18 months, the Cybertruck is going to be a huge hit. The gigacasting tech is amazing. Despite having quality issues, the cars are amazing too. Some day, I will have one. Just not today.
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