Elon Musk admits an error



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Elon Musk, CEO of Tesla.ASSOCIATED PRESS

Last week, when Tesla announced the closure of its retail stores, analysts announced its bankruptcy. Yesterday, Tesla announced that it maintains 90% of its stores open after all. Elon Musk just admitted an error and corrected it quickly, which I did not know he could do. After a year of strange behavior, Musk shows a certain maturity and gains a little confidence.

Some CEOs have worked hard to maintain the illusion that they have never made mistakes and will never do so. This is why the first quarter following the arrival of a new CEO is often a bloodbath because the new CEO pin all the company's problems on the former CEO and eliminates as much as possible to facilitate the demonstration of improvement a year later.

General Electric is a good recent example. The day Larry Culp became CEO, the company written off $ 23 billion, or about 25% of the company's market capitalization at the time. This is anything but the kitchen sink. Now that Culp has passed his first quarter as CEO, I expect fewer and smaller amortizations to be established, which is a good comparison for Culp's first year as CEO.

Sometimes the efforts of a CEO to avoid admitting an error can be clearly seen only retrospectively. Brian Krzanich, the former CEO of Intel, is a good recent example.

In January 2018, when Krzanich announced that Intel processors were vulnerable to two attacks named Specter and Meltdown, he said that Intel processors were 20 years old and that AMD processors were also vulnerable. In other words, the house was already on fire when it arrived, but it does not matter, because his neighbor's house was also on fire.

It was months before the researchers showed that AMD processors were immune to Meltdown and one of two types of spectrum attacks. Tony Mitchell, one of my managers, understood Krzanich's bad management and added to his position in AMD last January. AMD was the best-performing S & P 500 in 2018.

The behavior of Elon Musk has led many to question his mental health. Frankly, most people who think they are right and the world is wrong are crazy. Yet when it comes to electric cars, Musk proves that he was not crazy to start Tesla. In fact, the reason Tesla has so much potential is that many people still think it's wrong.

I find it amazing that many analysts, short sellers and SEC representatives believe they know how to handle Tesla better than Musk. If the SEC forces me to resign, I do not know which investors they protect because no one else can do the work. I shudder thinking about the magnitude of the deduction that would be & nbsp; necessary for that one & nbsp; & nbsp; makes a new general manager more comfortable to take the job.

CEOs, like Musk, who are trying to make big bold changes, are like captains sailing in unknown waters. They are required to make mistakes. However, major changes to better serve customers are the means by which companies generate big gains for their shareholders. When I'm looking for big winnings, I'd rather invest in a CEO who fixes mistakes quickly than anyone who claims to never make mistakes.

Optimal investment decisions are easy to understand in hindsight, but always require a leap of faith when they are taken. Tony Mitchell has clearly demonstrated this lesson when he bought AMD last January in the midst of Intel's revelations on Specter and Meltdown.

The key to making this jump in faith was the observation that, six weeks ago, Krzanich had sold almost all of his Intel stock. In my opinion, this says more about what Krzanich really thought about Spectrum and Meltdown than anything he said in all press releases, conference calls and interviews.

During the recent turbulence on Tesla shares, I bought more at $ 285, which is 4% of my portfolio in bear market. It may take a year to know if this decision was good. I made a leap of faith because I see Tesla selling more and more cars and Musk is in the same boat as our shareholders, unlike Krzanich who abandoned the ship. It sometimes happens that the market reduces the risk of making big gains by lowering the price of an aggressive title. For Tesla, I think it's one of those moments.

If you want to be notified when I write about actions such as Tesla that you follow, click here.

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Elon Musk, CEO of Tesla.ASSOCIATED PRESS

Last week, when Tesla announced the closure of its retail stores, analysts announced its bankruptcy. Yesterday, Tesla announced that it maintains 90% of its stores open after all. Elon Musk just admitted an error and corrected it quickly, which I did not know he could do. After a year of strange behavior, Musk shows a certain maturity and gains a little confidence.

Some CEOs strive to maintain the illusion that they have never been wrong and that they will never do it. This is why the first quarter following the arrival of a new CEO is often a bloodbath because the new CEO pin all the company's problems on the former CEO and eliminates as much as possible to facilitate the demonstration of improvement a year later.

General Electric is a good recent example. The day Larry Culp became CEO, the company written off $ 23 billion, or about 25% of the company's market capitalization at the time. This is anything but the kitchen sink. Now that Culp has passed his first quarter as CEO, I expect fewer and smaller amortizations to be established, which is a good comparison for Culp's first year as CEO.

Sometimes the efforts of a CEO to avoid admitting an error can be clearly seen only retrospectively. Brian Krzanich, the former CEO of Intel, is a good recent example.

In January 2018, when Krzanich announced that Intel processors were vulnerable to two attacks named Specter and Meltdown, he said that Intel processors dating back 20 years were affected and that AMD processors were also vulnerable. In other words, the house was already on fire when it arrived but it does not matter, since his neighbor's house was also on fire.

It was months before the researchers showed that AMD processors were immune to Meltdown and one of two types of spectrum attacks. Tony Mitchell, one of my managers, understood Krzanich's bad management and added to his position in AMD last January. AMD continued to be the best-performing S & P 500 for 2018.

The behavior of Elon Musk has led many to question his mental health. Frankly, most people who think they are right and the world is wrong are crazy. Yet when it comes to electric cars, Musk proves that he was not crazy to start Tesla. In fact, the reason Tesla has so much potential is that many people still think it's wrong.

I find it amazing that many analysts, short sellers and SEC representatives believe they know how to handle Tesla better than Musk. If the SEC forces me to resign, I do not know which investors they protect because no one else can do the work. I shudder, thinking of the magnitude of the deduction that would be necessary for the new CEO to be comfortable with the job.

CEOs, like Musk, who are trying to make big bold changes, are like captains sailing in unknown waters. They are required to make mistakes. However, major changes to better serve customers are the means by which companies generate big gains for their shareholders. When I'm looking for big winnings, I'd rather invest in a CEO who fixes mistakes quickly than anyone who claims to never make mistakes.

Optimal investment decisions are easy to understand in hindsight, but always require a leap of faith when they are taken. Tony Mitchell has clearly demonstrated this lesson when he bought AMD last January in the midst of Intel's revelations on Specter and Meltdown.

The key to making this jump in faith was the observation that, six weeks ago, Krzanich had sold almost all of his Intel stock. In my opinion, this says more about what Krzanich really thought about Spectrum and Meltdown than anything he said in all press releases, conference calls and interviews.

During the recent turbulence on Tesla shares, I bought more at $ 285, which is 4% of my portfolio in bear market. It may take a year to know if this decision was good. I made a leap of faith because I see Tesla selling more and more cars and Musk is in the same boat as our shareholders, unlike Krzanich who abandoned the ship. It happens that the market reduces the risk of making significant gains by lowering the price of an aggressive title. For Tesla, I think it's one of those moments.

If you want to be notified when I write about actions like Tesla that you follow, click here.

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