Hey Everyone,In a previous episode of investors therapy, Aswath Damodaran talked about the two differ
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June 10 · Issue #7 · View online
Investors Therapy is a newsletter that helps investors understand their psychology so they can make smarter investment decisions. If you're ready to take the next step in your investment journey, subscribe!
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Hey Everyone, In a previous episode of investors therapy, Aswath Damodaran talked about the two different camps in the investment community that have vastly different ways of analyzing investments:
- Number crunchers: Tend to rely heavily on quantitative data. Once they have the financial data (cash flow statements, balance sheets, EPS guidance, etc.), they try to make an investment decision. The metrics are great for telling us about what happened yesterday or today but are terrible at projecting the future (unless the company is a low margin discretionary business like toilet paper, soap, toothpaste, etc.). But for companies that are building their markets focusing just on the financials provides us with an incomplete story.
- Storytellers: Care about the vision for the company. For startups, they tend to heavily focus on the story component because there isn’t enough data to build a financial model. The problem with storytellers is they lose track of reality and pay ridiculous prices for companies that may never make money. Story based businesses do very well when the economy is strong, and high return investment opportunities are limited, but when the economy turns, these businesses are usually the first to be hurt.
By looking at Tesla, you can see how these camps are split on the stock.
The last six months at Tesla have been brutal for Elon Musk. While the media has reported on the millions spent on retooling the factory, the long working hours at Tesla, the supply issues at the plant, and the accusations that work-related injuries are being underreported. After reading all of this it makes you wonder, why are the employees still showing up at the plant? Wouldn’t they all be burnt out at this point? Are they just rotating new employees to replace the burnout employees? A storyteller would focus on Elon’s leadership style. One aspect that doesn’t get talked about enough is Elon’s relentless calling to accomplish Tesla’s mission “…to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.” His dedication to the mission is made apparent through Elon’s insane work ethic and ambition, which serves as a gravitational force attracting workers, capital, and customers. Maybe it’s because he’s providing his workers with an opportunity to be apart of something larger than themselves.
“During a visit to the NASA space center in 1962, President John F. Kennedy noticed a janitor carrying a broom. He interrupted his tour, walked over to the man and said, ‘Hi, I’m Jack Kennedy. What are you doing?’
'Well, Mr. President,’ the janitor responded, 'I’m helping put a man on the moon.’ ” Maybe because Elon has bet everything on his mission it has provided Elon with the credibility and confidence of his employees. Maybe the employees are rallying around Elon to save his mission. Maybe this is why owner operated publically traded companies outperform their non-owner-operated peers? OR maybe his mission is impossible to accomplish. Maybe all of his employees will burn out. Maybe he won’t be able to attract the needed capital to keep his company afloat. Either way, I think we all can learn from what’s transpiring at Tesla. Cheers,
Jordan
Disclaimer: I don’t have any positions in Telsa and I don’t intend to because I don’t understand the car market :(.
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Solid investment advice from Foxnews
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6 Things I Learned From Big Mistakes
“…Graham is the father of value investing, Warren Buffett’s mentor, and the author of the greatest and/or most read investment book ever written. By all accounts he was a pioneer in the world of fundamental investing, discovering and writing about techniques investors now take for granted, and performing analysis on company fundamentals before computers and the Internet made everything so much easier. Despite all of this, Graham still got destroyed during the Great Depression. And not only did he get destroyed, he did so through the use of leverage…”
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Fooled by experts - Aaron's Blog
Experts are generally right until they’re wrong. Unfortunately, it’s very easy to get fooled into thinking that experts are always right. This is because they are…experts. They are authoritative…
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10 Impactful Quotes That Could Change the Way You See Investing
Investing doesn’t have to be that complicated. Most of what has been said about investing can be boiled down to concise and impactful quotes.
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The powerful investment lesson you can learn from an anniversary you probably forgot - MarketWatch
BP’s disastrous oil spill happened 8 years ago. Earnings per share still aren’t back to where they were before the spill — but the stock’s recovery makes it one of the best-performing stocks in the sector.
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Tears ‘R’ Us: The World’s Biggest Toy Store Didn’t Have to Die - Bloomberg
An object lesson in financial mismanagement and miscalculation from the fallen Toys “R” Us.
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Elon Musk and His Team Talk At TESLA 2018 Shareholder’s Meeting. -Pt.1- - YouTube
Elon Musk gives an overview of the current situation at Tesla, then the whole Tesla team (but mostly Musk) answers questions submitted online and from the au…
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Gig Economy Business Model Dealt a Blow in California Ruling - The New York Times
The state’s highest court made it much harder for companies like Uber to classify workers as contractors rather than employees.
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When You Hire an Executive, You're Hiring a Network
Tomasz Tunguz is a venture capitalist at Redpoint and writes about startups, fund raising, SaaS companies, and best practices for founders.
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Reach vs Revenue | steve cheney – technology, business & strategy
Lately there has been a ton of talk about overambitious startups raising too much money to get to unicorn status. It goes like this: the startup is growing, but in order to grow into its crazy valuation, it needs to pour money into paid acquisition channels and meanwhile its unit economics suck.
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New warnings about cuts to Social Security and Medicare are a reason to worry - MarketWatch
Social Security and Medicare are still looking wobbly
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More than half of law firms say their partners aren’t busy enough - The Washington Post
Many law firms still aren’t preparing for the future.
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Financial Crisis May Have Hit ’80s Generation the Hardest - Real Time Economics - WSJ
The children born into Ronald Reagan’s “Morning in America” era could be on track to become the last recession’s “lost generation,” new research from the Federal Reserve Bank of St. Louis says.
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Sam Zell on the real estate cycle, interest rates, and immigration - MarketWatch
Legendary real estate investor Sam Zell addressed a real-estate investment trust conference in a freewheeling conversation that’s been cleaned up for public consumption here.
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It's not all about square footage in real estate | Sacramento Appraisal Blog | Real Estate Appraiser
A bigger house is always worth more, right? It’s really easy to fall into the trap of believing that, but it’s not always true. Let’s talk about it. Myth: Extra
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U.S. Economic Outlook: June 2018 (Jordan: Sorry the guy presenting is wearing a bow tie >.<)
Home prices have risen in nearly all parts of the nation over the last few years. While price gains vary considerably across urban markets, some places have had especially rapid appreciation that put values above their pre-Great Recession peak, even after controlling for inflation.
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Forget SF, this California city is where Millennials are moving, study says - SFGate
Sacramento was the third most popular destination for those ages 20 to 34 in 2016, behind Seattle and Columbia, the capital of South Carolina, according to analysis of U.S. Census data by investment site SmartAsset.
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People haven’t been this optimistic about house prices since just before the crash - MarketWatch
A new Gallup poll says two-thirds of people believe it’s a good time to buy a home.
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Home Depot's sluggish sales may be warning sign for housing
Home Deport reported sales growth that missed Wall Street’s forecasts. The company specifically cited a ‘slow start’ to spring as a problem. Bad weather did hurt sales. But rising mortgage rates might be a bigger problem going forward.
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Jerry Seinfeld’s Closed Door - Study Hacks - Cal Newport
The Price of Funny A reader recently pointed me toward a 2014 interview with Jerry Seinfeld on Alec Baldwin’s Here’s The Thing. Around 34 minutes into the
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Real estate headache: Baby boomers who won't sell their homes - CBS News
The predicted mass migration to smaller homes as they hit their retirement years isn’t happening – here’s why
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Here’s Anthony Bourdain’s Foreword to Marilyn Hagerty’s Book ‘Grand Forks’ - Eater
If you or anyone you know is considering suicide or self-harm or is anxious, depressed, upset, or needs to talk, call the National Suicide Prevention Lifeline at 1-800-273-8255 or text the Crisis…
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Monkeys' cosy alliance with wolves looks like domestication | New Scientist
Herds of gelada monkeys in Ethiopia are unfazed by wolves wandering through to hunt rodents, but is one domesticating the other just as humans did with dogs?
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Century-old message in a bottle washes up in Germany - CNN
Dropped into the sea more than a century ago by a British scientist, a message in a bottle that washed up on a German island may be the oldest ever found.
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Country Time | Legal-Ade - YouTube
Every year kids’ lemonade stands get busted for not having a permit. So Country Time is introducing Legal-Ade, a crack team ready to pay for lemonade stand p…
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Principles for Success: "The Call to Adventure" | Episode 1 - YouTube
In his new animated series, Principles for Success, Ray Dalio takes you on a thought-provoking adventure to help you understand his principles–and how to cr…
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Learning How to Learn: My Conversation With Barbara Oakley
In this interview, Barbara Oakley, 8-time author and creator of Learning to Learn, an online course with over a million enrolled students, shares the science and strategies to learn more quickly, overcome procrastination and get better at practically anything.
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Anne Wojcicki on How to Build the Future - YouTube
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A Value Investor Lost in the Valley, with Chris Douvos – [Invest Like the Best, EP.85]
My guest this week is Chris Douvos, a managing partner at Venture Investment Associates, which allocates 1.6B in behalf of investors.
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