Posted on : By : PPD1962 Posted in : Equities

Tesla: Is Krugman right?

Question: Nobel-winning economist, Paul Krugman, asks did the Tesla story ever make sense? Can Tesla Really Last?

Answer: in November 2011, I believed the Tesla hype, but in December 2011 reality started to hit.

Wandering around Berlin in December 2011, I saw a Tesla shop and thought I could get into my first Tesla, but how disappointed that was.  The outside of the Model S was beautiful, but the inside had the build quality of a Datsun 1200 (actually a favourite of mine).  Immediately, I thought Tesla has to get its quality up if it is to retain its first mover advantage.  In July 2016, Tesla opened a Sydney store and I thought let’s have another look.  Well the interior quality was just as bad as in 2011, but even worse was the chassis and drive-train, sans bodywork, on display.  The welding on the aluminium frame looked like the robot was programmed to replicate a drunken first year apprentice.  At this point, I was certain the Japanese or Germans were going to eat Tesla’s lunch.

However, then came Full Self-Driving (“FSD”) vapour-ware in October 2016.  Soon after it was sold to consumers as a beta product.  Put simply, the software isn’t full self-driving and, clearly, is a deceptive and misleading claim in some legal jurisdictions.

If I want to pay a premium price in 2023 for an electric car, I wouldn’t buy it from Tesla (the most expensive car company in the world on most metrics).   Better to buy one of the other car manufacturers.

In summary, Krugman is correct: you need more than hype!

 

 

 

Posted on : By : PPD1962 Posted in : Alternatives (really weird stuff)|Debt|Equities|Private Equity|Realty

ESG: why don’t you intend to offer a product?

Question: if the world’s largest asset manager, Blackrock (BlackRock’s Pitch for Socially Conscious Investing Antagonizes All Sides – The New York Times), does environmental, social and governance (“ESG”) for investors, why won’t TurnerStreet?

Answer: ESG means different things to different investors (e.g. is nuclear green?), and what we think determines to be ESG responsible might not suit a particular client.

Hence, TurnerStreet’s product design is about the investor-client telling us what they want excluded from the performance benchmark for ESG reasons.  With technological advances it is straight forwward, and relatively cheap, to have a client specific benchmark.  This makes it possible to measure our worth as an investment manager, and for the client to quantify the cost of their ESG decisions against a traditional benchmark.

Blackrock can tell clients what are ESG investments, but we aren’t as presumptuous.

Posted on : By : PPD1962 Posted in : Alternatives (really weird stuff)|Cash|Debt|Derivatives|Equities|Personalty|Private Equity|Realty

AA is sometimes drive by tax strategies

Question: Is this true (How Ordinary Americans Can Also Buy, Borrow, And Die Without Paying Taxes)?

Answer: Yes.  The asset allocation (“AA”)decision, the most important in investing, is often driven by expected returns and risks of various asset classes.  However, if you are wealthy it is often driven by tax.  The “buy, borrow, and die with paying taxes” strategy will shift AA.

 

Posted on : By : PPD1962 Posted in : Crypto

FTX: more regulation, or more enforcement?

Question: the head of the SEC says crypto regulation is ok (Even After FTX, S.E.C. Chair Sees No Need for New Crypto Laws – The New Times ), but can this be right?

Answer: the FTX debacle appears to be fraud related but brazen enough to fool sophisticated investors and the regular punters for only a few years.   The fact that the fraud lasted a fraction of the time the Madoff Ponzi scheme lasted does give some indication the that the regulation works.  Also, remember a large proportion of crypto investors are anti-government, anti-regulation, anti-fiat, anti-permissions, etc. so it is little wonder that the pressure to regulate crypto in the same way as securities was limited.