Elon Musk and Tesla are anomalies in business and should not be competed with by GM, Ford, and Atlantis as they would likely lose a lot of money and may cease to exist.
Anomaly-based investing is a valuable strategy that involves recognizing anomalies in markets and taking advantage of extreme swings in auction-driven markets.
The podcast discusses the anomaly of Elon Musk and advises against competing with him. It highlights that GM, Ford, and Atlantis should not try to play the same game as Tesla as they would likely lose a lot of money and may eventually cease to exist. Anomaly-based investing is introduced, emphasizing the importance of recognizing anomalies and not following conventional strategies. The speaker also mentions anomalies found in the auto industry, such as the looming threat of EVs and the inability of other companies to compete with Tesla. Overall, the episode underscores the importance of identifying anomalies in markets and making investment decisions based on those anomalies.
Investing in Anomalies and Auction-Driven Markets
The podcast delves into the concept of anomaly-based investing and auction-driven markets. It explains that auction-driven markets can exhibit extreme swings in both directions and advises investors to take advantage of these extremes. The speaker highlights the relevance of Mr. Market's behavior, where prices can be significantly overvalued or undervalued, and suggests that value investors should focus on opportunities during extreme low valuations. Anomaly-based investing is recommended as a strategy to capitalize on unusual occurrences or pricing discrepancies. Additionally, the podcast mentions the importance of staying alert for anomalies, as they may not arise frequently.
Finding Anomalies Through Research and 13F Filings
The podcast explores the methods for finding anomalies in investments. It encourages investors to engage in continuous reading, research, and keeping an eye out for situations that do not make sense. It suggests looking into 13F filings, where professional investors disclose their holdings, and reverse engineering their investment decisions. The speaker explains the value of investigating why successful investors choose certain stocks, providing a means to narrow down the investment pool. Moreover, the podcast mentions the importance of understanding the reasoning behind investment choices and deciding whether to agree or disagree with them. It concludes by acknowledging that investing inevitably involves mistakes and that anomaly-based investing can be akin to investigative journalism.
I discuss a recent Mohnish Pabrai Q&A in which he mentions that in business Elon Musk is an anomaly worth paying attention to, and that you wouldn’t want to compete with his company Tesla. During the interview Pabrai discusses the importance of finding investing anomalies.
Tesla stock, TSLA stock.
Related episode:
Mohnish Pabrai: How to Find Stock Compounders + My Thoughts
Disclaimer: I am not a financial adviser and nothing in this content is financial advice. This content is for education and entertainment purposes only. Do your own analysis and/or seek professional financial advice before making any investment decision.
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