Want to invest in electric cars? GM could be a better bet than Tesla

[ajdelange]

Whether the cars are of good quality or poor and whether the company grows with more or less monotonic increase in share price has nothing to do with whether the shares are a good investment or not. A good investor makes money whether the shares go up or down. The necessary condition is change. Thus the best shares in terms of their potential to produce income are the ones that are most volatile. It's hard to beat Tesla on volatility so I give the award to Tesla.

 

[ldjessee]

Whether the cars are of good quality or poor and whether the company grows with more or less monotonic increase in share price has nothing to do with whether the shares are a good investment or not. A good investor makes money whether the shares go up or down. The necessary condition is change. Thus the best shares in terms of their potential to produce income are the ones that are most volatile. It's hard to beat Tesla on volatility so I give the award to Tesla.

I think that is true for short term investors.

Long term investors ignore short term volatility, or at least discount it, and focus on other metrics.

 

[ajdelange]

It's true for a "good" investor. I did break my own rule and use the word "good" without specifying the attached metric. Here it is the amount of money you can make. Compare two stocks one of which helps third world poor people while reducing greenhouse gasses etc and which rises linearly in price from $100 to 110 over some period of time. The most you can make on it is $10 a share. Compare to a company that mines metals using child labor in third world countries and dumps the tailings into a lake where they poison poor people. It's stock price starts at $100 and after the same period of time arrives at the same $110 level but in the interim oscillates between $150 and $50. It's a poor investor who makes only $10 on that issue. A better one sells it at near $150 and buys it back near $50. A better one still sells at near $150 and takes a short position. He can make much more than $10 so yes, to be a good investor you have to deal with the short term which many of us are neither willing nor cpable of doing. Thus the other metrics may let us sleep better at night but they aren't making us money!