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"Million" $ Teslas!

Year 2020 was interesting in many ways...one of those is that many of my friends and colleagues (some of you are readers of my blog) are now  driving "Million" $ Teslas! Let me explain what I mean by "Million" $ Teslas and investing lessons one can derive from this....

At start of 2020, well equipped Tesla car was around $70-80K and Tesla company valuation was $76B. At end of 2020, Tesla car is depreciated and may be worth about $60K. And at end of 2020, Tesla company is valued over $800Billion. Just imagine if one of you who bought Tesla car at start of year would have instead bought Tesla stock, your portfolio would have $800K and some change to buy Tesla car you always wanted (provided you had not sold it - more on this later). And imagine someone buying Tesla car back in 2009 vs buying Tesla stock at IPO price of $20. By some calculations they are driving "10 million$" Tesla (assuming they still kept those cars).

So what's investing lesson from this.

Buy Product; Buy Stock; Keep Stock as long as you are using the Product!

This is the lesson I am telling my kids time and again since personally I did not follow this. I have many examples to empirically prove that this simple investing lesson works. Many of you would be able to connect with following examples.

  • Amazon - Ordering for last 20 years
  • Apple - bought almost every product since first iPOD in 2001...
  • Netflix - since they had DVD by mail in early 2000
  • Google - since it became dominant and only search engine..also using Youtube, docs, gmail..
  • Facebook - while it was still only on college campuses..
  • Disney - have been visiting Disneyland since mid 90s..and watching movies even before that
  • Microsoft - since early 90s
  • Costco - must be using for over 20 years
  • Comcast - for last 10+ years as internet provider
  • Twitter - have been active for few years
  • Tesla - while personally I did not buy Tesla car, I was waiting for affordable version of Tesla (and still waiting...)
  • T-mobile - I was using AT&T for 20+ years but switched to T-mobile couple of years back..
The last example brings 2nd lesson:

Sell the stock when you stop using product for extended period of time!

While many examples are about consumer product companies, one can apply same for B2B companies also such as Salesforce, TSMC, Amazon (for its dominant AWS unit) or companies which went out of existence (like SUN Microsystems, Silicon Graphics and so on).

While looking back is always 20:20, there would be many opportunities in future to apply these simple lessons..some recent examples would be:
  • UBER
  • Spotify
  • AirBNB
  • Snowflake
  • Peloton
  • or even finding out winners in old media companies (just check out how many streaming services you signed up and use many times during week)
So the lessons from "Million" $ Teslas is:

Buy Product; Buy Stock; Keep Stock as long as you are using the Product!
Sell the stock when you stop using the product for extended period of time!

Have a great MLK Day and Congratulations to President Biden and Vice President Harris for taking charge of US leadership on Jan 20!

/Shyam







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