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Notes from the Florida Republic: The Issue (No. 4) with Elon Musk and Our Citizenship Test

People ask me (Garrett Baldwin) all the time why I don’t invest in Tesla for the long term. 

A few reasons… 

They’re pretty obvious, even if you’ve taken down a bottle of McCallan on a Tuesday morning. 

It’s trading as if it will somehow cure every energy problem to ever occur on earth and on what seems to be this assumption that every human being is going to buy a Tesla (and even then, the numbers are still overly optimistic.) 

I don’t see it. Because my money is on the Chinese, South Korean, Brazilian, and every European government coming together and saying – screw Elon Musk. 

The belief that “we have our own automotive companies, and it’s in our interest – our national interest – to not let Tesla run everything… free market be damned.”

I’m not stupid when it comes to behavioral economics or finance. I understand why people buy things for $800 and hope to sell them for $900. But eventually… and there is always an eventually… the bottom falls out. And someone is left holding the bag of excrement.

Today, Tesla is the world’s largest electric vehicle manufacturer. 

And its stock is trading like so. 

But in three years. Three years. THREE YEARS… it will be passed by a small company (in comparison) called Volkswagen on EV sales for total global market share.

Volkswagen is trading OTC (VWAGY) right now at a price-to-book value of 0.82x and pays a dividend. Remember, it will own the largest market share of EV by 2024, at current pace. 

Volkswagen also owns Audi, whose latest EV luxury vehicle is something I actually want to buy and blows away anything Tesla has ever made. VW also owns a little firm called Porsche. 

Now, here’s where it gets really weird. The Porsche family operates a holding company that trades OTC and controls 53% of Volkswagen stock. POAHY stock trades at 0.6x book value.

And it pays a dividend.

Meanwhile, Tesla trades at 29 times book value and was well over 40x just a few weeks ago. 

I’ve never seen a disconnect between present value and future value than this story.

Yea, we’re in interesting times. You don’t need a map to understand when markets break from their fundamentals. When mania kicks in. But you have to do your best to not be the bag holder. And watching people act like this mania is going to last forever is a total comedy to me. 

The mania of crowds comes and goes. Is this time different? 

Yes and no. It isn’t different because manias end. It IS different because we didn’t have central banks in the 1600s and during the Panics of the 1800s. We also didn’t have the internet in the 1920s. 

But we’ll get there. We’ll get the next correction (or we’ll get massive levels of inflation). 

It’s going to end. I don’t have a date, and we can keep dancing when the music is playing. 

I’ve recommended trading Tesla up and down, just like I did from its recent momentum reversal that took it from 900 to 660.

And even then… I’d still buy Tesla tomorrow over VW and Porsche for a two-week play in a positive momentum market full of Yolo Reddit gamblers who believe they know more in two days of reading posts than I do in 20 years in finance. 

But that’s not the real reason why I don’t own Tesla. I don’t own Tesla because of Elon Musk.

Elon Musk is the reason why the Florida Republic will never have a Space Program. 

The single dumbest thing humanity has done this century is start any program – public or private – to try to go to Mars. 

And Musk is at the center of a massive waste of resources simply because he read a bunch of science fiction books when he was eight. 

There is no reason to go to Mars. We have a pretty amazing planet right now that we could fix instead of abandoning. Mars is a total wasteland that is less habitable than the South Pole. 

Maybe make the South Pole habitable before you move to a place that is consistently colder than the South Pole. At least the sky is blue at the South Pole, not some hellish, blood red that is a reminder of every terrible Sunday School story about Moses or Passover from my youth.

What is Musk’s plan for Mars? Well, there’s no magnetic field to protect from radiation, so humans would have to live in tunnels and eat solar-power grown beans – technology that hasn’t even been perfected and commoditized here on this planet.

And if your space suit rips, you die a death that is worse than having a Mustard Gas container explode in your face in the Trenches of Verdun.

Mars One will cost $6 billion. 

Elon Musk predicts that moving to Mars will eventually cost $500,000 per person.

This is a massive waste of money, and it’s incredible to watch very rich investors plow through their savings because they think that the movie Total Recall might be real life in 700 years.

The Florida Republic has no plan to visit Mars. Ever. And though we’d keep Cape Canaveral, our initial plan is to turn it into a Space REIT, and charge tenants like Elon Musk and NASA money to launch their stupid Mars programs into orbit. 

The closest we will ever get to an enhanced space program is Space Mountain at Disney World.

Here in the Florida Republic, we would instead cut back on space exploration and use billions of dollars to feed our people through intelligent market economics, and thrust foolish CEOs chasing these boyhood dreams of Mars from catapults into the sea.

We have real problems here. And the Florida Republic will solve problems in our borders. 

We’ll instead put our time and energy into something more useful…

Like pre-K education or more baseball stadiums. 

Don’t lie. Baseball stadiums, as stupid as they are as a public investment… are still better investments than any pursuit of an uninhabitable death rock.

We have some very dumb people walking around. But our master class “ain’t too brighter.” 

And for that reason, we would have a very simple, seven-question citizenship test for all who wish to join the Florida Republic. It goes like this:

  1. Do you attest that the sky is blue? 
  2. Are you sure?
  3. Would you prefer that it be magnetic death red?
  4. Would you like to be judged on your character above all else?
  5. Would you mind your own business?
  6. Would you keep your hands to yourself?
  7. Do you like baseball? (It will be the national sport)

The right answers are Yes, Yes, No, Yes, Yes, Yes, Yes.

No exceptions.