I’m Changing My Mind on Tesla
My head snapped back and slammed into the seat back.
As the landscape around me turned into a blur, I could feel my whole body being pressed backward. My stomach churned and I couldn’t get a single word out of my mouth.
No, this isn’t my description of a car accident.
This is exactly how it feels to go from zero to sixty miles per hour in less than three seconds.
And I have to tell you, my speedy ride last week completely changed my view on Tesla!
But does that mean you should invest in the stock?
Testing Out Tesla’s “Ludicrous Mode”
Last week, I was in Las Vegas to attend the Trader’s Expo conference.
During the show, I heard dozens of professional traders give their advice for how to trade different markets, how to grow your wealth, and what specific stocks they recommended.
I’m always amazed at the creative ways that different people approach the markets.
Some look at the fundamentals of a company, researching how much they will earn and how loyal their customers are. Others look at historical price patterns and try to determine where a stock will trade based on where it has traded in the past.
And there are plenty of wild and crazy approaches out there that just don’t make any sense too. I heard one speaker try to convince his audience that you should buy a particular stock every year on November 17th because it has traded higher on this day in previous years. (What happens if November 17th is a weekend?)
While I loved attending the conference and learning more about what successful traders are focusing on, perhaps my favorite part of the trip was Saturday evening with a friend of mine who lives in Vegas.
Brad is a successful entrepreneur with a thriving local business. We’ve been friends for years and always enjoy talking about business, the markets, and our different investment ideas.
This past weekend, I took an Uber to Brad’s place and got to meet his dogs, check out his new home, and we grilled out next to his pool.
(He even has a “casita” in his back yard that he rents out on Airbnb for a few hundred dollars a night. I told you he was a shrewd businessman.)
After dinner, Brad decided to show me his most recent purchase. A brand-new Tesla Model S complete with all the best options including beautiful white leather seats and the souped-up “ludicrous mode” performance package.
That’s when Brad took me for a ride and found an empty desert street for us to check out the car’s acceleration.
“I had to pay an extra $20,000 for the ludicrous mode,” Brad told me.
“But it was totally worth it! I love showing my friends how fast she goes! So far, you’re the 8th person to test out the acceleration.”
I did some quick math and figured out that my respective portion of this cost was a cool $2,500 for about 3 seconds of adrenaline.
Just for fun, Brad slowed to a stop, took a deep breath, and floored the accelerator again. There’s simply nothing like that feeling of hyper speed kicking in all at once!
I’m Convinced on the Car — But Not on the Stock
Quite frankly, my ride with Brad changed my opinion when it comes to Tesla’s cars.
Yes, I knew they were great vehicles. Everyone I knew who had driven one was a fan.
But I don’t think I realized just how much care and engineering has gone into making these cars.
No detail has been overlooked from the stitching on the interior, to the touch screen interface on the dashboard, to the way the car operates in just about every situation. (And yes, Brad also showed me the autonomous driving feature when we got on the highway.)
When we finished our ride and got out of the car, Brad asked me if I would ever consider buying a Tesla.
“I don’t know if I’ll ever spend the money to buy one,” I told him. “But I’d certainly love to get the chance to drive one!”
Brad agreed that next time I’m in town, he would let me drive his car. I may even try out the “ludicrous mode” acceleration!
I already knew what Brad’s next question would be…
“So tell me this… Would you buy Tesla’s stock now??”
Brad knew from my previous writings that I wasn’t a fan of Tesla Inc. (TSLA) as an investment. There are simply too many red flags including a market value that shares no relationship to the company’s profits, the guarantee of rising competition from established auto companies, cash flow concerns, and even accounting irregularities which some professional investors have uncovered.
For some reason, Brad thought that since I had the experience of riding in a Tesla, it would change my mind about the stock.
But as a rational investor, the quality of a company’s product is simply one factor that I analyze when deciding whether to invest.
And yes, Tesla’s product is top notch. The company makes some amazing cars.
But whenever we research whether to buy a stock or not, it is important to make a rational decision based on all the facts. There are so many other companies that make great products that consumers love — which are actually turning a profit!
And those are the companies we want to invest our hard-earned money into.
It may not sound quite as exciting to tell your friends that you’re invested in a consumer staples company that pays a 4% dividend yield. But chances are, you’ll grow your wealth much more quickly than your friend who falls in love with a product and decides to invest his hard-earned nest egg into the company without doing his research.
Here’s some good advice… Buy products (that you can afford) with your heart. But always invest with your head.
Here’s to growing and protecting your wealth!