An Anecdotal Gem

by on October 23, 2013  •  In Miscellaneous

The following anecdote comes from WkndNotes by Eric Peters (a treasure trove of humor and investment insight) and touches upon Tesla. Our readers know that PM Jar does not discuss ideas, and we have no intention of jumping into the Tesla debate or to declare ourselves Musk-lovers. The reason why we are showcasing this excerpt is because reading it, especially the last sentence, struck a chord. Enjoy.

” ‘Driverless electric Tesla’s, powered by Google, dispatched by Uber will shuttle people around continuously – the technology already exists, this future is inevitable,’ explained the brilliant macro CIO, basking in California’s bright sunlight, whisking me 20yrs forward. Of course, regulations need to catch up. They will. ‘And annual car sales will collapse from today’s 100mm pace to just 20mm.’ You see automobiles are driven only 3% of the time, meaning the world needs far fewer once we harness technology to utilize them more efficiently, continuously. ‘In that future, with Tesla as the world’s #2 auto company, it’ll be worth $100bln versus today’s $20bln market cap.’ He’s owned Tesla for years, but is now nearly flat, waiting for a pull back. ‘Most buyers today think it will be another BMW and with that rather modest ambition, it’s now aggressively priced.’ Anyhow, the world is changing rapidly. Accelerating. So equity investors clamor to buy disruptive companies that’ll shape it, drive it. ‘Maynard Keynes said in 100yrs, people will need to work 4hrs per week to meet their needs, and here we are.’ Naturally, the growth in our ‘needs’ has far outpaced productivity gains. So we’re working harder than ever. But a radically new phase has begun, where robotics dominate production, services too. Thus the owners of capital and machines will accumulate vastly disproportionate wealth, while the middle class sinks. The poor drown. And governments race to redistribute or face riots, revolution. ‘Viewed in this context, Obama-care was inevitable.’ So I asked what theme most interests him. You see, he’s developed a series of simple rules to identify errors people make in their investment theses. ‘I’m looking for opportunities in areas distorted by people who are afraid of change, yearning for things that are simply never coming back.’


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