Everybody Thinks Their An Expert On Everything (And That Can Give Us An Edge!)

It’s funny and annoying how everybody seems to want to be an expert on everything and think they can achieve being so by hanging out in social media and cable new echo chambers. People really do think reading the timeline they are being fed by the algorithms on Facebook, Twitter, etc and watching two minutes of TV coverage on any particular topic means they know enough about something that they too should be regurgitating what they think they know.

Saturday morning as I’m finishing up getting my haircut in a tiny town in rural NM, the 70-ish year-old dude next up says to me when I say hi, “Your Tesla out there has lost have its value since I last saw it parked out there a couple months ago.”

My reply, “Hmm, while Tesla did cut prices on its new cars by 15-20% in the US at the end of last year, my Tesla that I bought used a few months ago certainly hasn’t lost half its value.”

Him: “I’m pretty sure it has lost half its value. But anyway, do you even like your Tesla?”

Me: “My Tesla Model S is the best bang for my buck and best product I’ve bought in years. Other than the Model 3 I had before this one, I can’t think of another purchase that I’ve been happier about in years.”

Him: “Why? Is it a good car? Is it fast?”

Me:”Well, my Model S Plaid is the best vehicle I’ve ever been in… and it’s the fastest car that’s ever been made. It’s faster than an F1 car. The Model 3 I had before this was also amazing and was faster than most any other car you can buy anyway. And they basically drive themselves these days.”

Him: “I’ve been in cars that are faster than your Model S Plaid. I’ve driven Porches and Corvettes.”

Me, not bothering to correct/debate him on the fact that the Model S Plaid is the only car ever to have gone from 0-60 in less than 2 seconds other than a $2 million EV that you can’t buy: “Ok.”

Him: “Besides, they can’t really drive themselves anyway.”

Me: “Well, it drives me back and forth to my office here  in this town every day and yesterday it drove me back and forth to my heart doctor appointment in Albuquerque.”

Him: “Did you see that video of that lady asleep on the interstate while her Tesla’s driving her?”

Me, not pointing out that he’s now saying the Tesla can drive itself: “Actually, that’s not possible. The car watches you and makes sure you don’t stop watching the street or take your hands off the steering wheel/yoke for more than a few seconds at a time.”

Him: “You’re going to have to take your car in for a recall.”

Me: “No. I’m going to download a software update at my house but the NHTSA calls that a recall.”

Him, turning to the lady who cuts my hair: “He’s like a salesman for Tesla.”

Me: “Have you ever been in a Tesla?”

Him: “No.”

Me: “Okay. I gotta go. Nice to see you again.”

I would have been happy to take him for a ride in it if he’s asked and/or if he’d not been so didactic.

I know a lot about Tesla and I feel pretty comfortable discussing it with anybody. Remember that I drove the original Tesla roadster through Central Park on TV back in 2008. I’ve interviewed their executives and was blocked on Twitter by Elon the day he was supposed to come on my TV show in 2008 for wondering outloud why Tesla needed a $500 million welfare loan from the US taxpayer back 15 years ago. I’ve studied Tesla for years and was a bear on Tesla for years. I became a bull on Tesla when I was researching it four years ago as they were rolling out the Model 3 with Full Self Driving software and so I bought a Model 3 to see if the product was any good. Like I just wrote above, it was the best purchased I’d made in years and might only be topped by my Model S Plaid.

I flipped from bear to bull to making Tesla my largest position in my hedge fund four years ago at a split-adjusted $17 per share and am still holding much of those shares today. I’ve driven every Tesla car ever made and I have two orders for the Cybertruck in place since the day they announced it. I’ve read hundreds of Wall Street reports on Tesla, I’ve listened to dozens of their earnings reports, I’ve watched dozens of Tesla product and investor webcasts, I’ve modeled out what their revenues and margins and unit sales will look like for years, I’ve studied their approach to designing their own self-driving chips and why they don’t use Lidar and so on.

But this random old dude who’s never even been in a Tesla for a ride was so confident in his ignorant and wrong thinking on Tesla and everything about Tesla that he stood there trying to tell me reality. I know I’m not right about everything, including on Tesla. I know there are people who know more about Tesla and EVs and cars in general than I do. I probably wouldn’t randomly argue with them about Tesla. Unless we are arguing about the product and the quality of it. Because I know firsthand, as I have been saying for four years now, the Tesla car is a Revolutionary leap forward in quality, ease-of-use, innovation and potential improvement from here.

The point here is twofold:

1) That you can step back and look at any cross section of our society right now and there are people that are going to confidently spew un-researched and often infantile nonsense about any topic including:

• The Economy
• The Markets
• Stocks
• Cryptocurrency
• Technology
• Innovation
• Politics
• Policy
• Banking/The Fed
• Etc.

And that’s not a bad thing! That’s where out edge lies. We can do better than skim social media slop and regurgitate the views we heard on TV from people who probably have an agenda anyway.

Here’s a quote from an article in the Financial Times this weekend from an old friend of mine:

“Part of this shift towards a kitchen table sensibility in competition policy is down to an increasing public sense that the economics profession itself has been captured by corporate interests. As Cristina Caffarra, an economist and consultant on hundreds of corporate mergers, put it at the event, “economists make up useful narratives and sell them to lawyers”. They then use this seemingly scientific testimony to argue their cases. But the current crop of regulators in Washington is much less interested in economic assumptions about how markets, many of which are increasingly questioned, particularly in the digital space, should work.”

2) We have to be flexible and not rigid in our analysis.

I had the guts to turn from bear to bull to making Tesla my largest position just a year after I’d written these words for publication:

“I want to buy companies that are selling products or creating platforms that I can understand that have revenues and earnings not companies that are gaming Republican Democrat Regime subsidy targeted tax trick games and calling it profits. So I don’t own Tesla, never have and probably never will.”

Millions of people buy and sell stocks and cryptos and mutual funds while doing no homework, having no gestalt, or insights or willingness to admit they’re ever wrong. They get locked into their viewpoint and then spend their days reinforcing that viewpoint instead of striving to learn more and see if their viewpoint might be wrong.

Most people just want to fit in to their tribe, their fraternity, their socioeconomic group, their kin, their friends, their colleagues, their idols. If we can avoid the groupthink, we can outperform. We can do better than the masses simply by slowing down, doing real research and striving to be empathetic and objective. And by being flexible and admitting when we were wrong.

People in general, like economists and like politicians, want confirmation from the “useful narratives” in their particular echo chamber.

The only confirmation that matters for investors is long-term returns and the only way to get long-term returns is by being flexible and driven by homework.

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