What You Can Learn From Elon Musk About Investing

Elon Musk now owns what is possibly the biggest fortune in the history of humanity. Thanks to Tesla’s rising share price and other investments, the tech entrepreneur is now worth an estimated $280 billion, nearly double Jeff Bezos, the previous record holder. 

In recent years, Musk has become more vocal about investing and what he thinks people should do with their money. For the tech billionaire, caution is not warranted. He believes in taking calculated risks that are likely to pay off. 

Invest From First Principles

Elon Musk is a big believer in the value of working from first principles. You start with a set of axioms you believe are true and then work from there to see how far you get. Although his reasoning is complicated sometimes, Musk believes that all economic value ultimately derives from physics. If something is feasible, then it is worth investing in. If it’s not, then look for opportunities elsewhere. 

Don’t Play It Safe

Many investors play it safe, building their fortunes over the course of decades, not months. But Musk doesn’t believe in this approach to life. He believes in creating as much value as possible right now. Instead of slowly building wealth based on diversification, he believes that people should use their reasoning skills and pick winners. 

Of course, if you aren’t able to pick winners, you should still play it safe and use traditional strategies. However, if you have compelling reasons to buy a particular company and you trust your instincts, you might want to go for it. 

Bet On The Long-Term

In the short term, investment opportunities come and go. Just look at what has happened to Netflix over recent months. It was the darling of the tech industry until 2021, but is now plummeting, and doesn’t look like it will be back for a long time. 

When you explore Musk’s investments, you immediately see how he always looks to play the long game. His investments aren’t for today, but ten to thirty years in the future. 

When considering investments, you want to do the same. Investors make the most money when they pick winners ten to thirty years out. These are what Peter Lynch calls “100-baggers” – stocks that return 100 times their original value or more. 

Do Things That Other People Are Afraid To Do 

If you follow the herd, you’ll get herd returns. Your portfolio might make 7 percent per year if you’re lucky. 

However, Musk would recommend taking a contrarian position or doing something that other people are afraid to do, like forex trading. By doing something different, you put yourself in a better position to make out-sized returns compared to other people in the investing community. You should always do your own research before you dive into an investment, you will want to look into market trends, politics surrounding it, and news as these can have a huge impact. Another thing you will need to do is find the best broker for you whether you plan to open a forex funded account or a crypto wallet.

Own Your Success

Lastly, Musk takes the view that people should own their success. He works hard every day to ensure that his investments actually pay off, both for himself and the rest of humanity, 

As such, you should do the same. Regularly review board minutes, and hold the companies that you invest in accountable. Keep management honest.