View profile

Investors Therapy #7: Storytellers vs Number Crunchers, Tears ‘R’ Us, Grandpa please sell your home, and much more!

Revue
 
Hey Everyone,In a previous episode of investors therapy, Aswath Damodaran talked about the two differ
 

Investors Therapy

June 10 · Issue #7 · View online
The best investors focus on improving their thinking habits before investing in the market. Investors Therapy is a monthly newsletter that covers all forms of investing and helps investors understand their psychology to make better investment decisions. If you're ready to take the next step in your investment journey, subscribe!

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 :(.



Solid investment advice from Foxnews
Investor Psychology
6 Things I Learned From Big Mistakes
Fooled by experts - Aaron's Blog
10 Impactful Quotes That Could Change the Way You See Investing
Stocks
The powerful investment lesson you can learn from an anniversary you probably forgot - MarketWatch
Tears ‘R’ Us: The World’s Biggest Toy Store Didn’t Have to Die - Bloomberg
Elon Musk and His Team Talk At TESLA 2018 Shareholder’s Meeting. -Pt.1- - YouTube
Startups/Angels/VCs
Gig Economy Business Model Dealt a Blow in California Ruling - The New York Times
When You Hire an Executive, You're Hiring a Network
Reach vs Revenue | steve cheney – technology, business & strategy
Economy
New warnings about cuts to Social Security and Medicare are a reason to worry - MarketWatch
More than half of law firms say their partners aren’t busy enough - The Washington Post
Financial Crisis May Have Hit ’80s Generation the Hardest - Real Time Economics - WSJ
Real Estate
Sam Zell on the real estate cycle, interest rates, and immigration - MarketWatch
It's not all about square footage in real estate | Sacramento Appraisal Blog | Real Estate Appraiser
U.S. Economic Outlook: June 2018 (Jordan: Sorry the guy presenting is wearing a bow tie >.<)
Forget SF, this California city is where Millennials are moving, study says - SFGate
People haven’t been this optimistic about house prices since just before the crash - MarketWatch
Home Depot's sluggish sales may be warning sign for housing
Careers, Society, and Personal Development
Jerry Seinfeld’s Closed Door - Study Hacks - Cal Newport
Real estate headache: Baby boomers who won't sell their homes - CBS News
Here’s Anthony Bourdain’s Foreword to Marilyn Hagerty’s Book ‘Grand Forks’ - Eater
Monkeys' cosy alliance with wolves looks like domestication | New Scientist
Century-old message in a bottle washes up in Germany - CNN
Watch/Listen
Country Time | Legal-Ade - YouTube
Principles for Success: "The Call to Adventure" | Episode 1 - YouTube
Learning How to Learn: My Conversation With Barbara Oakley
Anne Wojcicki on How to Build the Future - YouTube
A Value Investor Lost in the Valley, with Chris Douvos – [Invest Like the Best, EP.85]
Thanks for reading this month's reading list
If you like what you read and you want it delivered to your inbox subscribe to my newsletter or share it with your friends.  If you have any articles I should check out, please email me at jt@jbtblog.com.
Did you enjoy this issue?
If you don't want these updates anymore, please unsubscribe here
If you were forwarded this newsletter and you like it, you can subscribe here
Powered by Revue