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Nerd-like investing

Question: Do you know of great investors other than Warren Buffett whom I could emulate? I feel that Buffett is way out of my league. —asked at “Ask a friend, ask Efren” free service available at www.personalfinance.ph, Facebook and SMS.

Answer:  Why don’t you take a look at Elon Musk? Now, before you say that he is way out of your league as well because he is a billionaire, read on.

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First, you are right.

According to Wikipedia, Elon Reeves Musk has a net worth of $18.2 billion and is listed by Forbes as the 58th richest person in the world.

At age 48, he has the following impressive credentials: 1) founder, CEO, and lead designer of SpaceX; 2) cofounder, CEO, and product architect of Tesla, Inc.; 3) cofounder and CEO of Neuralink; 4) founder of The Boring Company; 5) cofounder and cochair of OpenAI; and 6) cofounder of PayPal.

But strip him of all his credentials and you have a person who is but a mere nerd, a nerd who always dreamt of changing the world.

And change the world he did.

The following details are from the Bloomberg Risk Takers documentary, Elon Musk Profiled.

You could say that Elon is the real-life Tony Stark of Marvel Comics’ Iron Man.

At age 23, Elon started his first company, Z2, the first online city listings akin to an early version of Google maps and sold it five years later for over $300 million in cash and stock options.

He set up PayPal and later sold it to eBay for $1.5 billion. Elon is one of the largest suppliers of solar panels in the United States through Solar City.

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He boosted interest in electric cars through Tesla. With SpaceX, Elon produced the first commercially viable rocket.

How much of a nerd was Elon?  When he ran out of books to read, he started reading the encyclopedia.

Elon was once afraid of the dark. But he got over this fear by convincing himself that darkness was just the absence of photons in the visible wavelength.

He would enroll in classes but hardly attend them.  He just read books and showed up for the exams.

Elon had the ability to persuade people to buy into his grandiose dreams; dreams that would come true in a pragmatic and not in a “build it and they will come” way.

Elon believed in the following:

  • The first mover advantage. He makes his dream a reality while he still has the sole franchise.
  • Team. Nobody has the monopoly of ideas, talent and money to achieve success. And success normally comes in small bites.
  • Failures, detractors, nonbelievers and competition are all par for the course. Elon nearly lost all of his money from selling his first two companies by making big bets.

He was criticized by Wall Street for his bravado when he launched the first IPO of a car manufacturer since Henry Ford. He was literally at the bottom of the pit at one point in his life that he would wake up to find tears on his pillow.

But Elon knew that with big risks also came the potential for big returns.

Elon’s beliefs are nothing new. They are time-tested principles in investing.

For example, he knew that you need to buy low and sell high. But you can only buy low if you are one of the first to see that an investment is cheap relative to its intrinsic value.

A person may have millions in investable funds.  But even Elon relied on experts to help him execute his dreams. So, don’t be afraid to take in as guides the experts like bankers, insurance people, wealth managers and financial planners.

Losses are part of investing.  Yet, losses are not the rewards.  They are lessons that help you achieve greater heights. Do you want larger returns? Then, be ready to take on greater risks. You don’t have to be a nerd to be as successful in investing as Elon.

Just follow the basic lessons in investing and you should be “nerd-like” on your way to investing success.

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