Bitcoin appears to be holding the line at around the $17,000 mark, down from a one-year high of over $57,000. Is it time to invest?
Tesla appears to be holding the line at the $170-$195 range, down from a one-year high of over $400 per share. Is it time to invest?
No and no.
Cryptocurrency, as we have been yelling for years, is not an investment. It is a gamble. Read our 2020 article, Buying Cryptocurrency: Fad, Fraud or Fortune-Maker? if you need reminding.
As for Tesla, Elon Musk remains the single largest shareholder even after selling billions of dollars of Tesla stock to help finance his acquisition of Twitter. The prior sales helped push Tesla’s share price down to where it is now. Given that Musk is in debt to the tune of about $13 billion because of his Twitter purchase, that the debt is secured by his remaining Tesla shares, and given that Twitter is hemorrhaging cash, it is not unlikely that more Tesla share sales will follow. We don’t really need to factor in the distraction that Musk’s many roles must be causing him (assuming, of course, that he is human, which, in fairness, remains questionable) to conclude that buying Tesla shares today remains a very risky proposition.
Taking a step back, if we had to bet on one or the other, we’d choose Tesla over Bitcoin (or any other cryptocurrency) any day of the week. But, the thing about Financial Poise is this: we don’t advocate betting, speculating, or gambling. Many people are better off not investing in individual stocks at all. Need some convincing? Read Investing Basics For Beginners Installment #1: What is Stock? And Should You Buy Some?
And here’s another thing: even though Tesla was early, that doesn’t mean it will win. Read The First Mover Disadvantage: Why the Early Bird Doesn’t Always Catch the Worm to understand the reasoning behind why. And read New EV Entries Nibbling Away at Tesla EV Share, According to S&P Global Mobility (published yesterday) and GM EV Vs. Tesla: The Competition For Electric Vehicle Dominance to see how that reasoning is already proving itself out.
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