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2017 Investor Roundtable:General Discussion

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Any weakness in the presidential selection process has an impact on investment decisions as we see today in the bold efforts at comprehensive tax reform that would not have been possible during Obama's time. I've earlier questioned Tom Steyer's motives for impeachment now since this might just be the second step in a presidential bid.

In 1984 to a government 1 class I suggested for its group project a search for a qualified presidential candidate. They bought it and had a great time raising money (yes, I joined them for a car wash), and they took out an add in the Wall Street Journal for a chief executive, four year job, $450,000 a year, all perks. Must be a U.S. born citizen over 35. No specification of the actual job. Because I was dating a newspaper reporter, I met the Sacramento reporter for the AP and made sure he attended a press conference the class held in the Governor's Press Room. National coverage thus assured.

We had some interesting responses. The Secretary/Assistant for the CEO of an internationally known perfume manufacturer wrote: "this sounds like the kind of position my boss would like." Once it became known we were looking for a qualified president there were additional repercussions. A six-year old girl was interviewed by a Southern California TV station since she wanted to be the first female president. A publicist/agent for four Hollywood movie stars sent their pictures, but they would not put themselves through the vetting process that was devised for the class. In discussions with the agent he explained, "regarding sex, our clients will never unzip their trousers unless the deal is guaranteed." Oh were that always true.

Of the three finalists, one was a mid-sized bank CEO who had to drop out because he had another "real" interview and couldn't meet the already scheduled press conference for our contestants. Another, a radical feminist was really angry at men and turned off even the women in the class. Their ultimate favorite was a janitor who worked at Indiana State University. During his press conference he was asked a question I will reveal after a digression.

As a military man you will remember, acutely, better than I the Lebanon invasion during the Reagan Administration. As I remember it from news accounts our WWII un-mothballed battleships were hurling shells of Model T weight into the hills. But for some reason the Army or Marine (which is hard to believe), used different mapping coordinates and the shells often landed where they weren't intended by the trackers. Naturally, the locals didn't like it and did not help the US soldiers on the ground by killing one or another of them. Reagan said in a press conference, "they're just trying to test my determination." Later, with a smile on his face, some Lebanese drove a truckload of explosives into the barracks where 241 of our troops were killed. We retreated shortly thereafter.

Our janitor pick for president was asked how he would use the marines to protect Israel. "I'm all for sending our troops to defend Israel within Israel at their northern border." Reminds me of Nasruddin again.

The class started at 8:00 a.m. On Wednesdays they had free time for the group project. When I got there at 8:00 they had already assembled at 7:00.

Since I have some experience in soliciting from the people a candidate qualified for President, what do you think of Paul Rieckhoff, CEO of Iraq and Afghanistan Veterans of America? I've seen him in TV when he spoke for Vote Vets. He is really articulate and I think well versed in defending Progressive values. Though pleasant enough in aspect and demeanor, he looks like any tank which ran into him would be damaged. He's the kind of guy who when Trump does his manly pull of a handshake would end up being thrown over Paul's shoulder, if he wanted.

What do you say, my sacred brain trust?
 
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This is false. I looked into a new construction here in Oslo which had such an automatic parking structure. You drive your car into a platform and exit the car. The platform then moves to a parking space which is stacked very efficiently somewhere below. They assured me that I could use my electric car and just plug in on the platform and either as the platform moves it starts charging or as the platform hits it's resting spot it connects with a power plug and the charging starts.
Technically this is a lot simpler than the entire platform concept.
We didn't buy the apartment because they would charge more for the parking spot in a solution which is worse for me as a user in day-to-day use as well as much higher maintenance for the HOA, while the builder saves a lot of space.

Cobos
Maybe in that parking structure the car tray is large enough. I have seem several automated parking manufacturers propose trays with EV charging, but they said it's not easy, as the location of the charge port is different in each car. If you use your UMC with a long cable in such an automated parking it could be very dangerous.
 

Pretty sure Nikola Motors will bankrupt. Those who have been backing that company will learn the lesson the hard way. Don't go against physics.

Nikola's Semi sells for $375,000, will be available in 2019. That combined with driver's cost, maintenance cost, insurance, and the inconvenience of Hydrogen fueling, will not be competitive even with today's truck.

Nikola Motors claims to supply buyers with 1 million miles free hydrogen. Two problems, first where will the hydrogen be? That's a huge inconvenience. Second, it's obvious Nikola Motors can't compete against Tesla's electric semi, in the likely case it bankrupts in 2 years, then the promised free hydrogen is suddenly not available. Buyers are not dumb, all the refundable reservation will quickly disappear.
 
I think there are probably more than one production bottlenecks. These issues are being solved/fine tuned in parallel, not that they add to the delay in a cumulative fashion. The long pole by far is the battery pack production, which will be solved. Building automation system takes time but it is not that complicated. I am cautiously optimistic about Model 3's production ramp.
Obviously they have more than one bottleneck. They said so. If they planned to fix all the problems in parallel I believe that they would have been much more bullish with their estimates. A modified version of an earlier post:
Why don’t they say that they will be producing 5k per week when they solve the pack production problems?

Why don’t they plan to get every section of the line up to 5k per week while they are fixing the battery pack production problems? Then they could instantly get to 5k per week as soon as they fix the pack production. They will clearly do as much as they can in parallel but the reason that they don’t plan to do that completely is because they don’t have the required resources.
The main difference between the M3 and the MX is that it’s a different type of problem. With the MX the problem was producing good cars. With the M3 it is fixings bottlenecks in large scale production. The main impact that will have on the results is that when they solve each problem there will be big production jumps.
 
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I am comfortable pushing a small boat of $$$ into the fog of the future and seeing what happens. My retirement assets are all in index funds, so I can afford to do this.
You actually believe that index funds are safer than TSLA :D?! Hard to believe!
 
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Obviously they have more than one bottleneck. They said so. If they planned to fix all the problems in parallel I believe that they would have been much more bullish with their estimates. A modified version of an earlier post:

I observed some large projects and it's always stressful near the end. I have never seen a company solving bottlenecks in a sequential manner. It doesn't make sense, and they have people on every subsystems. Sometimes one critical path get solved another one surface. That doesn't mean they have been working on them one at a time.

If I were them, I wouldn't get too bullish regarding timeline. It's a huge system, surprising issues can pop up. You don't want to give the best case scenario then apologize. It's better to have a little bit buffer. That buffer may not be enough in this case.
 
You actually believe that index funds are safer than TSLA :D?! Hard to believe!

Yes, but at a cost: lower probable return in exchange for lower volatility and redundancy.

For those not familiar with this old debate, I design my personal financial structure to be redundant against single points of failure (similar to a Falcon 9 rocket octaweb and a Tesla battery pack). My IRAs/401k use total market stock and bond funds. Money outside of retirement accounts goes towards a small number of high risk bets like TSLA.

I’ve been through 2 market crashes in the time I’ve been investing: the dot com crash of 2001 and the 2008 financial crisis. I’ve seen friends and coworkers wiped out or worse due to overconfidence in a small number of stocks or even just 1 stock. I have confidence in Tesla, but I’m smart enough to know that I cannot know the future or predict Black Swan events. I plan accordingly.
 
@Intl Professor ~ “As a military man you will remember, acutely, better than I the Lebanon invasion during the Reagan Administration. As I remember it from news accounts our WWII un-mothballed battleships were hurling shells of Model T weight into the hills. But for some reason the Army or Marine (which is hard to believe), used different mapping coordinates and the shells often landed where they weren't intended by the trackers.”

Actual reference weight used to be VW Beetle. If you think of trying to lob a hand-grenade from a rocking swim platform ~ its ackward at best on a calm day. Hope that was not a beetle full of eleven college students.
:)

No, it is not hard to believe that the army and marine corps failed to communicate if you recall during the Carter administration the joint refugee rescue disaster. Nothing but charred bodies and aircraft left as a scar of failed military operations.

No, Bay of Pigs failure based on differences in time zones:-(

Similar non-military event with satellite landing on mars; metrics vs inches (I think that is what it was that buried the satellite) ~ lack of good human communication.

I used to listen to Paul on occasion as a guest speaker driving to or from campus a few years back, never saw him on TV. He is very impressive:)
 
Yes, but at a cost: lower probable return in exchange for lower volatility and redundancy.

For those not familiar with this old debate, I design my personal financial structure to be redundant against single points of failure (similar to a Falcon 9 rocket octaweb and a Tesla battery pack). My IRAs/401k use total market stock and bond funds. Money outside of retirement accounts goes towards a small number of high risk bets like TSLA.

I’ve been through 2 market crashes in the time I’ve been investing: the dot com crash of 2001 and the 2008 financial crisis. I’ve seen friends and coworkers wiped out or worse due to overconfidence in a small number of stocks or even just 1 stock. I have confidence in Tesla, but I’m smart enough to know that I cannot know the future or predict Black Swan events. I plan accordingly.

That's valuable advice. Someone asked Warren Buffett, in case he dies first, where should his wife keep the money, Buffett said he instructed the manager to keep 90% in stock index, 10% in government bond, for total peace of mind.

If I have an account that I want peace of mind, I would keep all in index. In the long run, the index on average can double every 8 or 9 years. I would invest the dividend into individual stocks. Each year I look for one company that I like the most for the long term, put that dividend into it.

For my accounts that I want high gain, I would concentrate into 1~3 stocks as long term investment, follow closely. I would get out only if one of these three things happened:
1. I realize I picked the wrong company
2. Things changed and it's no longer a great company
3. I found a better company
Learned this part from Philip Fisher.
 
Yes, but at a cost: lower probable return in exchange for lower volatility and redundancy.

For those not familiar with this old debate, I design my personal financial structure to be redundant against single points of failure (similar to a Falcon 9 rocket octaweb and a Tesla battery pack). My IRAs/401k use total market stock and bond funds. Money outside of retirement accounts goes towards a small number of high risk bets like TSLA.

I’ve been through 2 market crashes in the time I’ve been investing: the dot com crash of 2001 and the 2008 financial crisis. I’ve seen friends and coworkers wiped out or worse due to overconfidence in a small number of stocks or even just 1 stock. I have confidence in Tesla, but I’m smart enough to know that I cannot know the future or predict Black Swan events. I plan accordingly.

To expand on this.

Wipe out happens because the stock move up and down too much all within one year. Most of the people who get sudden large stock gains like in the dot com kept holding because they wanted to avoid being taxed at the highest rate (or greed, or belief). So they held and sell a little. So if the stock reverses and drop back down to zero. Most got trapped.

So, we are quite lucky that TSLA is a slow rising stock. It is actually the best scenario so that you can do tax efficient selling.

Another way to mitigate sudden losses is to never have any position bigger than $10 000 so that if it goes 10x, you won't think about tax at all and can just sell with abandon.

Many things have single point of failure, that's why it's probably not a good idea to buy a SPY with 100% of assets. Or any ETF that claims to be diversified. Just because no single failure points have been discovered yet, it doesn't mean it won't show up in the future for these ETFs. I read about their creation units when ETF first began and had some bad dreams about future collapses. Sure, when you just start out and you only have enough fund for one position, SPY represent good enough diversification, but as your net worth increase over time, it is a good idea to start selling some of the ETF and buy the individual stocks in the ETF yourself. Especially when the commission become less of an impact on your trades.
 
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