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TOTAL MARKET INSANITY: Toyota vs. Tesla

TOTAL MARKET INSANITY: Toyota vs. Tesla

The present market insanity reminds me of the similar mentality of Americans right before the 1929 stock market crash and the pre-1999 Tech Bubble.  However, the big difference today is that technology has destroyed the ability of investors to understand the meaning of VALUE.  The notion that technology makes the world better fails the test of time, especially when you read Joesph Tainter’s book, THE COLLAPSE OF COMPLEX SOCIETIES.

The new generation of millennials and even the baby-boomers have fallen HOOK, LINE, and SINKER for the glamour and glitter of technology.  So, if we ask most Americans about our future energy predicament, their knee-jerk reply is that “Technology will solve all of our problems.”  This is quite hilarious when, in fact, complex, sophisticated technology is a massive ENERGY BLACK HOLE.  The more technology we throw at a problem, the more energy is consumed.  

Thus, this brings me to my comparison of Toyota Motors vs. Tesla Inc.   Toyota was the largest auto manufacturer in the world in 2018 but was overtaken by Volkswagon last year.  Toyota didn’t produce any electric cars in 2019 but plans on rolling out ten new EV models in 2020.  However, if we compare the market fundamentals for Toyota and Tesla, investors have gone completely insane.

Currently, Tesla’s market cap is worth $259 billion compared to $206 billion for Toyota.  Why did investors push Tesla’s stock up to $1,400 a share ($259 billion market cap) when its total revenues in 2019 were only a little more than Toyota’s net income profits?  As you can see, Toyota posted $19 billion in net income profits on total revenues of $278 billion compared to Tesla’s $862 million net income loss on $24.3 billion in revenues.

Again, a perfect example of the investor mindset today.  Profits don’t matter, just technology, regardless if it continues to lose money.

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