Tesla, Alibaba Proving That Jim Chanos Isn’t Always Right
Investor Alert: This Guy Just Lost $50,000 on Tesla
“I lost $50,000 because of Tesla.”
That’s what my good friend Jon Ziegler told me after ranting and raving about how much he hated Tesla after getting crushed on his short position.
“It doesn’t make sense! The company doesn’t make any money but people act like it’s changing the world.”
Sour grapes can be a most unattractive quality.
While Jon is right about Tesla not making any money, that doesn’t mean it’s not changing the world, and it sure as hell doesn’t mean you couldn’t have made a lot of money as a shareholder.
You see, Jon took the advice of one of the most well-known experts in the world of finance: Jim Chanos.
Chanos has been bearish on Tesla since before the company even went public.
Truth be told, I don’t think I’ve ever seen someone so obsessed with wanting a company to fail. Jim Chanos has got to be the biggest Tesla bear around. And his reasoning has always been sound — from a technical standpoint.
If Tesla were any other company, you wouldn’t be able to pay people to invest in it.
But Tesla isn’t just any other company. It’s one of the most disruptive companies to come along in the past century.
The Audacity of Elon Musk
Oh, the audacity of Elon Musk.
The very smart and very arrogant tech whiz threw up his proverbial middle finger more than a decade ago and told the world that electric cars were about to change the entire dynamic of the automobile industry.
After coming on the scene and pumping the Tesla Roadster, he was mocked worse than Paris Hilton at a Mensa convention.
But here we are today with nearly every major car company in the world producing electric cars, or getting ready to.
Of course, that still doesn’t change the fact that as an investment, when you look at it on paper, it just doesn’t make sense. But what guys like Chanos and my friend Jon have only recently figured out is that most people don’t invest in Tesla, they invest in Elon Musk.
Changing the World
Using history as an indicator, think about some other very smart people who changed the world with new products that seemed insane at the time...
Henry Ford, Steve Jobs, Jeff Bezos... The list goes on and on.
Those folks were met with all kinds of reasons as to why they would fail and why investors in those companies would lose everything.
But that never happened.
You see, successful investors understand that not everything will always “pencil out” the way you might expect.
When the Model T was first in production, the president of the Michigan Savings Bank told Henry Ford’s lawyer not to invest in Ford because the horse is here to stay, and the automobile was only a novelty and a fad.
That’s some pretty crappy advice from a guy who, at the time, was known for being a pretty savvy investor.
The point is, even experts can get it wrong.
And while I make it no secret that I often look to the experts when I’m doing my own diligence, I also have to be conscious of the fact that sometimes I just know more than those experts.
Not only did I invest and profit in defiance of Jim Chanos’ calls to short Tesla — making me a ton of money, while my friend Jon Ziegler lost $50K — I also invested in and profited from Alibaba (NYSE: BABA) while Chanos was begging people to question its accounting.
Interestingly, Chanos’ comments on the company’s accounting were absolutely sound. But this was a stock that was not going to be deterred because the momentum was so strong that no one cared about its accounting.
I know that may not sit well with some folks, but my end result is simply to build wealth, not question why my investments are making money.
Get Rich by Ignoring the Experts
Now, I don’t want to make this a big anti-Chanos rant.
While the “King of all Shorts” has been dead wrong on Tesla and Alibaba, he’s also been right more times than not. And he continues to provide some pretty accurate analysis.
I suppose this is just how it is when it comes to “the experts.”
They usually get it right, but when they get it wrong, boy do they get it wrong.
I’ve certainly seen this in the legal marijuana space, where there have been a number of “experts” warning against investing in this industry.
But just like I did with Tesla and Alibaba when Chanos said to short them, I’ve done the same thing with legal marijuana...
I loaded up the truck.
I actually started covering the space a little more than three years ago.
And boy, when I first made it known that I was bullish on weed, it was like I had committed some kind of major sin.
But despite the obvious risk factors — primarily federal prohibition — everything else made sense. And I’m sure glad we didn’t listen to the “experts,” because over the past three years, we’ve pulled off nearly a dozen triple-digit gains in the space.
And the gains continue to come.
In fact, last week, one of our favorite cannabis plays, OrganiGram Holdings (TSX-V: OGI), got a nice boost after it was announced that it had entered into a memorandum of understanding (MOU) with the New Brunswick provincial authority for the distribution of cannabis to the recreational market.
Through that MOU, New Brunswick will secure a supply of at least 5 million grams of recreational marijuana per year from OrganiGram.
This is one of the first such MOUs in Canada.
The stock soared more than 15% on the news.
Of course, that’s nothing compared to what we’ve made since first recommending OGI back in late 2015. Check it out...
Now, if you’re a regular reader of these pages, you know I’ve made a boatload of cash in the legal marijuana space. And so have members of my Green Chip Stocks investment community.
And, quite frankly, the profits continue to roll in for one simple reason: The underlying reality for the boom in legal marijuana is so powerful that not even the threat of federal prohibition can stop it.
I’ve actually laid out my entire argument in this “Introduction to Marijuana Investing” video.
And, of course, my “Beginners Guide to Cannabis Investing” has become a major bestseller thanks to the simple fact that it provides a step-by-step process on how to make a boatload of cash in the legal cannabis market. You can get access to that book here.
Although the legal marijuana boom will one day come to an end, today it’s one of the most lucrative markets on the planet. And unless you hate money, you absolutely should have some exposure to this space.
You can click here to get started.
To a new way of life and a new generation of wealth...
@JeffSiegel on Twitter
Jeff is the founder and managing editor of Green Chip Stocks, a private investment community that capitalizes on opportunities in alternative energy, organic food markets, legal cannabis, and socially responsible investing. He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor's page.
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