Elon Musk’s Flawed Vision and the Dangers of Trusting Billionaires | Time

Many students know I never “drank the Tesla Kool-Aid.” However, occasionally students get tired of listening to me. So, perhaps hearing this Tesla perspective from Time Magazine may help. The Time Magazine piece, in my opinion, does a great job explaining the big picture surrounding electric vehicles (EVs). For example:

“A much more sustainable alternative to mass ownership of electric vehicles is to get people out of cars altogether—that entails making serious investments to create more reliable public transit networks, building out cycling infrastructure so people can safely ride a bike, and revitalizing the rail network after decades of underinvestment.”

I teach finance. I am not a psychologist. But I have wondered why “cults” seem to form more frequently. E.g., crypto so-called currency cults, meme-stock cults, Tesla/Elon cult, former president cult leading to the January 6 incident (e.g.: HTML), etc.. In all these cases, a person, thing, or idea is treated as a God. When clear evidence showing these are not Gods and are far from perfect (even detrimental to the individual in the cult and society as a whole) is presented, people double-down on their flawed beliefs. I don’t get it.

Nevertheless, may all read the Time article with an open mind and gain broader perspective on the electric vehicle space.

-Dr. Moore

https://time.com/6203815/elon-musk-flaws-billionaire-visions/

Celsius investors owed $4.7 billion beg judge to recover life savings

“Homeless, suicidal, down to last $1,000: Celsius investors beg bankruptcy judge for help.”

Wait a second. I thought a main motivation in “investing” in crypto “currency” was to get away from government and government regulation. Now, that the unregulated scheme took “investor” money they are asking that same government they were avoiding to bail them out?

“Celsius is down to $167 million ‘in cash on hand’, … owes its users around $4.7 billion… and has more than 100,000 creditors”

I would not count on the government and government regulation shunned by crypto “investors” to bail out the users “owed” $4.7 billion. If crypto “currency” is truly an “investment” then we all know there is risk of loss in investments. I remember many friends boasting about how crypto is not regulated and that was an advantage. Even Coinbase’s general counsel boasts how “Coinbase does not list securities. End of story.”: HTML.

Also some of the creditors “lent the platform cash without any collateral to back up the arrangement.” Please read the CNBC article linked below for even more dubious fine print in the Celsius agreements signed by retail investors hoping to get rich quick without government involvement. Regardless, “it is unclear whether customers will ever see their money again.”

“I believed in all the commercials, social media and advertising that showed Celsius was a high yield, low risk savings account. We were ensured that our funds are safer at Celsius than in a bank, This money is pretty much my life savings.”

Bank deposits are regulated and FDIC insured: HTML. Traditional brokerage accounts are regulated and SIPC insured: HTML. Crypto accounts are neither regulated (that’s how everyone wanted it right? – less government) nor insured. Well, regulation is on the way, but as of right now, not so much. So I don’t get why anyone would think funds are safer on a crypto platform than a regulated and insured account at a bank or brokerage.

I understand inflation is high driving up the cost of everyday goods and services. I understand folks are looking for ways to amplify their returns. But ignoring basics of regulation and insurance, and leveraging your life savings, in hopes of amplifying returns at best or getting rich quick at worst, is a recipe for the disasters we now see.

Several quotes come to mind: “slow and steady wins the race”, “be patient and move slowly to avoid mistakes”, “Truth is confirmed by inspection and delay, falsehood by haste and uncertainty”, “Dishonest money dwindles away, but he who gathers money little by little makes it grow.”, and “JOMO – Joy Of Missing Out.”

I hope those reading this post also read the CNBC article linked below. Also check out the recent NPR article “Amid the hype, they bought crypto near its peak. Now they cope with painful losses.”: HTML. Then sit down with a licensed and trusted financial advisor to map out a plan to recover if you lost money in crypto or continue to “gather little by little” if you avoided crypto and now experience JOMO.

-Dr. Moore

https://www.cnbc.com/2022/08/02/celsius-investors-owed-4point7-billion-beg-judge-to-recover-life-savings.html?__source=iosappshare|com.apple.UIKit.activity.Message

It’s been a vicious 6 months for the stock market. Here’s what they’re signaling : NPR

I found this article interesting regarding the recent stock market declines. Truth be told, stocks have been overvalued for some time relative to earnings (e.g., see www.multpl.com). Cheap money (low interest rates, federal stimulus, etc.) certainly contributed to the overvaluation. Nevertheless, my favorite part of the article is at the end:

“There is a huge desire, among policymakers and politicians especially, to see changes immediately, but to everyone’s frustration, it will take time to see if the Fed’s medicine is working.

If, in a few months, there are indications that the Fed is succeeding at bringing inflation under control, markets will stabilize. But if it becomes clear the Fed isn’t getting a handle on inflation, all bets are off.”

It is not just policy makers and politicians that want a quick fix. We as a society, as humans, have been conditioned to quick fixes, instant messages, microwaves, etc. Let’s have patience, choose the right actions, and see how this pans out.

-Dr. Moore

https://www.npr.org/2022/06/30/1108787657/6-months-stocks-2022-economy-first-half-nasdaq-dow

Bitcoin Wasn’t as Anonymous as Crypto Bros Told You

I found this morning read quite interesting. I long suspected, intuitively, that a kid with a fancy Nvidia card can’t truly compete with a hedge fund with a farm of 100,000+ processors in the crypto mining game. Turns out there are several peer-reviewed studies documenting just that.

Sure, the kid may eek out some coins, but several orders of magnitude less than the hedge fund using their superior pre-existing computing resources. Speaking of that, if you take into account the true cost to mining (computer, video card, electricity, rent that should be charged for room, time, etc.), the profit gap between pros and amateurs is assuredly much wider.

May this article encourage us to be mindful of the distinction between what is and what is perceived.

-Dr. Moore

https://gizmodo.com/bitcoin-cryptocurrency-centralized-not-anonymous-study-1849029656

College Student-Run Funds Are Shaping the Investors of Tomorrow – Bloomberg

This article, albeit from 2021.08.12, is related to my recent post on investors still holding out for GameStop. This article suggests: “the next generation of investors probably isn’t the average 31-year-old with a Robinhood Markets Inc. account. Instead, they’re more likely to come from the
college investment funds across the U.S. that give students the chance to manage serious money.” Sacramento State University also has a Student Investment Fund, which operates through the FIN160/MBA299A Student Investment Fund Management class: HTML. Let the Bloomberg.com article below be one more bit of motivation for students to be part of Student Investment Funds, such as that operated through FIN160/MBA299A here at California State University, Sacramento.

Enjoy the read,

-Dr. Moore

https://www.bloomberg.com/news/articles/2021-08-12/college-student-run-funds-are-shaping-the-investors-of-tomorrow?sref=13qBjFwP

GameStop Investors Still Await Riches From Epic Short Squeeze – WSJ

Greetings everyone. It has been quite some time since my last post. This article was brought to my attention by a former student. It reminds me of readings on cognitive dissonance (HTML), the frog-in-pan theory (HTML), and epistemic trespassing (HTML). In short, some folks double-down on their wrong views (cognitive dissonance), hold on to their losing position as losses mount (frog-in-pan theory), and all the while speak outside their expertise as if they were an expert (epistemic trespassing).

May you find those three links and this Wall Street Journal article interesting…

-Dr. Moore

https://www.wsj.com/articles/gamestop-investors-still-await-riches-from-epic-short-squeeze-11644066002

2 Key Ways Parents Can Raise Kids Who Are Eager To Do Chores : Goats and Soda : NPR

This is a very interesting read. I often hear from parents “my child doesn’t do anything but play video games.” Rather than blame the child, this article looks at the actions of parents in a child’s early developmental years. The article highlights two practices that contribute to helpful, cooperative, and kind children.

I would say this is a must read if you have young children. Implementing these practices now will make my life easier when they wind up in my finance class later in college. 🙂

-Dr. Moore

https://www.npr.org/sections/goatsandsoda/2021/03/05/974069925/are-we-raising-unhelpful-bossy-kids-heres-the-fix

Bitcoin: A 1929-Esque Bubble (Cryptocurrency:BTC-USD) | Seeking Alpha

Here is an interesting article on Bitcoin. I have yet to purchase or short any cryptocurrency and have no plans to either. As Eknath Easwaran once said “there is nothing to be ashamed of in living a simple life.” I’m cool with a handful of stocks and mutual funds. I’ll pass on crypto and meme stocks.

Back to the article. I didn’t think about the environmental impact of mining bitcoins. As stated in this article, greater awareness of the negative environmental consequences may be the catalyst to burst this bubble. To think, the fervor driving up the price of Bitcoin induces more mining which leads to greater electricity use and environmental erosion.

Have a good week everyone,

-Dr. Moore

https://seekingalpha.com/article/4426656-bitcoin-btc-1929-esque-bubble

A Black Professor’s Colleague Called the Cops on Him. What the School Did Next Made It Much Worse. – Mother Jones

Back on June 5, 2020, I shared an NPR article “American Police”: HTML In that post I mentioned how the trauma we all saw unfold on television regarding cases like Floyd, Arbery, and too many others opened old wounds of an incident right here at Sacramento State. But if there is one positive of the turmoil of 2020, it is a raised awareness of the past, present, and future of race relations in the USA: HTML.

While reading The Color of Money: Black Banks and the Racial Wealth Gap by Mehrsa Baradaran (who happened to be born in Iran and immigrated to the United States in 1986), I came across this statement on page 58:

“In short, widespread prosperity engendered a culture of inclusion” [emphasis added]

Reflecting on what happened to me on September 10, 2018, in the full context of my experiences at the university, my life, and historical race relations in America, the connection between exclusion and concentrated prosperity came to the fore. Allow me to re-write Baradaran’s statement:

“In short, concentrated prosperity engendered a culture of exclusion

But there is a subtlety here that I would like to shine light on. In order for there to be concentrated prosperity, those at the top must benefit from the labor of others. Those at the top must reposses, take claim, reappropriate, and/or steal the fruits of the labor of others. This, unfortunately, is in the DNA of our country which has slavery in its foundation: HTML.

A funny story of a now-retired colleague’s grandchildren comes to mind. He said he knew capitalism was alive and well just from observing how his granddaughter and grandson (not sure how old they were, let’s say 6 and 4, respectively) handled their allotment of Cheerios. The elder granddaughter wanted to eat her little brothers Cheerios before eating her own.

Although possibly traumatic to read, let my story be encouragement for all people to become increasingly aware of the dynamics at play in our country and in our minds.

-Dr. Moore

https://www.motherjones.com/politics/2020/12/black-professor-colleague-called-cops-david-moore-sacramento-state-racial-bias-academia/

Tesla is ‘profoundly overvalued,’ and its exclusion from the S&P 500 was a ‘brave’ decision by the index committee, DataTrek says | Markets Insider

In class today I talked about an interaction with my old boss 20 years ago. Our startup was acquired. The P/E rose to 400. I asked my boss “the market average P/E is 16, we are at 400, isn’t this overvalued? Shouldn’t I sell?” At the time he told me “your MBA does not apply anymore, it’s a new economy.” The stock went up in the next month or so from 180 to 250.

Within a year it came crashing back down from $250 to $3. I then asked my boss “does my MBA apply now?” He told me his wife was already upset with him.

So here we are today, 20 years later. TSLA has a P/E over 900. Does my MBA apply?

-Dr. Moore

https://markets.businessinsider.com/news/stocks/tesla-stock-sp500-exclusion-index-overvalued-profoundly-datatrek-committee-why-2020-9-1029575409