Why Elon Musk’s recent investing advice sounds like Warren Buffett

Tesla CEO Elon Musk and legendary investor Warren Buffett might disagree about the long-term value of cryptocurrencies, but they seem to share the same principles when it comes to investing in the stock market. 

Musk, the richest person on Earth according to the Bloomberg Billionaires Index, offered some investing advice in a tweet Sunday:

“Since I’ve been asked a lot: Buy stock in several companies that make products & services that you believe in. Only sell if you think their products and services are trending worse. Don’t panic when the market does.”

The tweet echoes the principles of value investing made famous by Buffett, currently the sixth richest person in the world. 

With value investing, you only buy the stocks of companies that have a business model that you believe in and understand. Ideally, these companies are undervalued and have the potential to provide greater earnings over a long period of time.

Since value investors look for deals based on their own research into the intrinsic value of a company, they don’t tend to follow trends or short-term stock movements in the market.

For Musk, then, Twitter is presumably a value investment based on this logic, as the company’s board recently accepted his offer to buy the company for $44 billion. He said that he wants to “unlock” the social media website’s “tremendous potential,” in a statement announcing the deal.

In tweeting, “don’t panic when the market does,” Musk also echoes one of Warren Buffett’s most famous quotes about not following the crowd, even when the market is down: “Be greedy when others are fearful, and fearful when others are greedy.”

In March, Musk also tweeted that in times of high inflation, it is “generally better to own physical things like a home or stock in companies you think make good products,” rather than keeping your money in cash.

However, he added that “I still own and won’t sell my Bitcoin, Ethereum or Doge,” in reference to his cryptocurrency holdings.

On Saturday at the Berkshire Hathaway annual shareholders meeting, Buffett — who once dismissed Bitcoin as “probably rat poison squared” — said he still wouldn’t invest in cryptocurrency, despite its growing acceptance, as “it’s not a productive asset and it doesn’t produce anything tangible.”

While Musk and Buffett might disagree on on cryptocurrency’s long-term prospects, Musk has also cautioned people to not “bet the farm on crypto” in a previous tweet, adding “true value is building products and providing services to your fellow human beings, not money in any form.”

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