Love or loathe him; there is no denying Elon Musk's monumental achievements, amassing a mind-boggling net worth of over $270 billion, making him the richest man globally.
From Zip2 to PayPal Holdings Inc PYPL to SpaceX to Tesla Inc TSLA to SolarCity to Open AI to The Boring Company, his entrepreneurial flair is undeniable.
"When I was in college, I wanted to be involved in things that would change the world," Musk said during a speech at D11, a technology conference, and he has certainly done that.
However, when considering investment decisions, it would be wise to take Elon Musk's influence in the public sphere with a grain of salt. In short, making any decisions based on one of his tweets could be detrimental to the performance of your portfolio.
One could argue Musk needs to act far more responsibly with the power he wields, but ultimately the decisions you make and who you choose to follow fall on your shoulders.
Twitter Inc TWTR has been front-page news in the last few days, with Musk currently owning a 9.1% passive stake in the company, roughly 73 million shares, despite being critical of Twitter's free speech principles. This is close to a whopping $3.4 billion.
He also landed a seat on the company's Board before deciding against becoming a director and reversing those plans. Musk then took this to the next level, putting in an offer of $43 billion to buy Twitter.
My stance is that the CEO of Twitter, Parag Agrawal, said it best when he warned investors of "distractions ahead."
Below, I show the monthly timeframe of Twitter. It doesn't take a seasoned investor to see that this is an unattractive chart and one that you want to avoid. The current month of April paints a volatile picture.
The fact that the price today is trading back around its IPO price of 2013 shows how little traction this stock has gained in nine years. It's a chart that whipsaws in both directions, making it difficult for positions to gain traction.
This environment is likely a day trader's paradise, but a paradise paved with false starts and broken dreams. Despite the ego succumbing to the false promises of quick riches, many will be familiar with the abysmal success rate of short-term trading.
Always stay true to the principles of sound investing, which are:
- First, identify high-probability assets using a proven analysis process that are likely to trend for months to years.
- Second, hold these positions in your portfolio for as long as they are in trend.
- And finally, to compound or buy more of the winning asset to exponentially grow your wealth.
Never deviate, and you will be handsomely rewarded.
The only "investors" who enjoy getting caught up in the noise are those who have prioritized being right over making a profit. This mindset won't bode well for the wealth you accumulate for retirement. Regret must not be an option.
Compare Twitter to Henry Shein, Inc HSIC a stock added to my portfolio last week. It's one that you are very likely not familiar with and unlikely to see on our media channels. However, it has a far better performance history and better upside potential than Twitter.
Below I have the monthly timeframe of HSIC.
So ask yourself this, have you educated yourself enough to protect yourself from the constant noise on our media channels and ensure you maximize your portfolio performance over the next three to five years and beyond?
Steer clear of the influencers who play no positive role in your wealth creation.
Look at the roots. Financial illiteracy is an epidemic that gets no mainstream media attention. It is your responsibility to learn, master, and pass on this sacred knowledge to your next of kin in today's world. The schooling system did not nurture these skills in you, and it is improbable it will do it for your loved ones.
Adopting a proven investment process keeps you objective and focuses you on the performance of the asset while simultaneously blocking out the noise. It is also less work for far more profit, and just a far more pleasant way of managing a portfolio.
After all, who wants a life glued to a screen when you could instead enjoy the pleasure that life offers you while your hard-earned money grows in the background through a few intelligent choices.
Photo: Includes an image from Web Summit on Flickr
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