Jason DeBolt, a 39 Year Multimillionaire’s Tesla stock value is Rs.83 CRORE worth today. It is one more success story that we all want to dream of ourselves. However, what lessons we can learn from such success stories?
For your information, Tesla is a US-based company that is in the business of electric vehicles and clean energy. Currently, the company has an $834B market cap, up from $75B at the start of 2020. The stock has already gained 24.7% in the first week of 2021 and is up more than 950% since 2020.
On 8th January 2021, a Twitter account Jason DeBolt mentioned that his net worth is $ 11,944,889.23 and his day portfolio gain is around $ 904,216.50 (approximately Rs.6.3 Crore)!!
He is claiming that is he is 39 years old and as per his claims, he is holding the Tesla stock since 2013 (for almost around 7 years) and in his portfolio, this is the only one stock he is holding.
Let us look at the stock performance of this particular stock.
The above Twitter account holder claims that he is holding the stocks since 2013. Look at the growth of the stock from 2013 to 2019 or 2020 and suddenly in 2020 a huge spike in stock price.
39 Year Multimillionaire’s Tesla stock value is Rs.83 CRORE – What we can learn?
I am not sure whether the claim is TRUE or FALSE and I don’t want to investigate the truth behind such claims. However, I am trying to point few loopholes from such risky investments.
The reason for choosing this story for my article is that I used to get few clients for my fee-only financial planning service and I found that they used to hold their employer stocks which in few cases maybe around 90% to 95% of their overall wealth.
# Concentrated RISK
Whenever I interact with such portfolios, I suggest to liquidate as and when the stocks are eligible for vesting and diversify as per the defined asset allocation between debt and equity.
However, the majority of them are reluctant to do so (especially if they see the growth of the stocks from March 2020 to today). Otherwise, they may be confident about the business module or financial strength of the employer.
However, just imagine a case where your employer’s stock portfolio is around Rs.2 Crore, and your own portfolio may be around Rs.30 lakhs. Suddenly the market started to crash or the company’s stock started to fall around 50%, then will you be in a position to sustain this downtrend?
In the above case of Jason DeBolt, even if the market crash or he comes out with around 90% of loss, then he can still live a comfortable life without bothering about work. His case may be exceptional or not genuine. However, it is not the same with many salaried who are holding their employer’s stocks.
# What IF Tesla stock followed the route of GE?
Up to a few years back, GE used to be the best stock to hold and many holding such stocks with the GE business module and growth. However, at a later stage, you may all know how the GE business impacted and the stock price struggling for long.
Look at the above chart of GE. It was peak during 2001 and later on it was struggling for almost 20 years to regain. Do you have the patience for 20 years to wait?
# We don’t know who is the next Tesla or GE
From the above two examples, it is clear that if you follow the strategy of the person who is claiming to be holding the Tesla Stock since 2013 and in his portfolio this is the only one stock he is holding. I am not sure what made him to hold this stock ALONE.
However, in real life, we don’t know who is the next Tesla or GE. Hence, if we are unsure of the outcome, then in the investing world the best solution is to DIVERSIFY.
# Don’t compare YOUR RISK with OTHERS
As I pointed above, even if Jason DeBolt’s portfolio turned around 90% under loss, he may still live a comfortable life. Is it the same as you? In the majority of the cases, it is NOT. In fact, you can’t sustain a single digit % loss. Hence, don’t compare such stories with yours and never try to replicate them.
# Success creates OVERCONFIDENT
Yes, usually during the bull market, even if you invest in junk stock, the price will go up tomorrow. This itself will create confidence inside us that WE KNOW THE MARKET VERY WELL. However, as of today, none can predict the market movements in the short run.
Even if you look at Jason Debolt’s interview “The Tesla Multimillionaire who resufes to cash his lottery ticket“, he claimed that many financial planners approached him. But he felt all of their advice like a JOKE. Because he is confident on what he did for the last 8 years and also confident in his strategy of holding Tesla forever.
However, it is not the case with many of us. Hence, be on the ground and understand both positives and negatives and prepare yourself for both the outcomes.
Conclusion:- There many such success stories and at the same time failure stories also (Take an example of Satyam). Hence, rather than trying to replicate such stories, the best strategy is to diversify in such a way that such positives or negatives in no way impact your financial goals. Happy investing!!
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