It’s meaningless to have the right investment thesis if your timing is bad. No one learned this lesson more in 2020 than all the sad sacks who shorted Tesla TSLA, 5.73%.
Given such metrics as the current price-to-earnings ratio of 1,400, to name but one, the thesis that the electric vehicle maker is wildly overvalued is even more valid today than a year ago. But the timing of betting against it? Who knows.
You know what Mr. Market says: The market can stay irrational longer than most investors can stay solvent. Mr. Market, if you haven’t been introduced, was the character created by Warren Buffett’s mentor—Benjamin Graham—in his 1949 classic “The Intelligent Investor.” In it, he warned of the dangers of market irrationality and group think.
Tesla’s rise is fueling the group think that electric vehicles are disrupting the U.S. and global auto markets in a major way. This depends on how you define “major,” and what parts of the global market you’re talking about.
For example, InsideEVs reports, “November 2020 was an amazing month for passenger plug-in electric cars with a new all-time monthly record of over 414,300 units!” But, it goes on to say, 364,000 of these units—88%—are attributable to China (over 198,000) and Europe (over 166,000). This implies about 50,000 units over the rest of the world, including the world’s number two market, the United States.
For the rest of this column: https://www.marketwatch.com/story/electric-vehicles-arent-going-to-take-over-any-time-soon-11609882954