FYI I agree with almost all of this, and currently have about 40% of my net worth in TSLA for that reason.
One caveat is the point about having a 5 year lead in autonomy—they do seem to have a lead something like that for the cameras-only + collecting data from the fleet approach (though consider also comma.ai), but in terms of raw capabilities of the cars, it’s not clear to me that they have much of a lead over Waymo / Cruise, etc, if any.
I think there’s a reasonable argument that Tesla’s approach is superior in the long run, but I wouldn’t say they have a 5 year lead in autonomy full stop.
Kelly should be applied to one’s total wealth, including the value of future income (see: Lifecycle Investing). Taking future income into account, my Tesla position is a smaller share of the total. Additionally, I want to target something like 2x leverage (Lifecycle Investing, again), so 40% of my net worth is only 20% of what I’d want to allocate to the market.
That said, 40% might still be too much. I haven’t rebalanced after the recent run-up, and I have a pending to-do to calculate my estimate of the expected returns and variance, and then adjust accordingly. I’m not sure which way that will come out.
FYI I agree with almost all of this, and currently have about 40% of my net worth in TSLA for that reason.
One caveat is the point about having a 5 year lead in autonomy—they do seem to have a lead something like that for the cameras-only + collecting data from the fleet approach (though consider also comma.ai), but in terms of raw capabilities of the cars, it’s not clear to me that they have much of a lead over Waymo / Cruise, etc, if any.
I think there’s a reasonable argument that Tesla’s approach is superior in the long run, but I wouldn’t say they have a 5 year lead in autonomy full stop.
See also my Arbital claim from Dec, 2016, and my FB post from April, 2019.
Moved to answer, as it seems like clearly answering the question.
It is not very rational to have 40% of one’s net worth in a single investment. You should use the https://en.wikipedia.org/wiki/Kelly_criterion to size your bets.
Kelly should be applied to one’s total wealth, including the value of future income (see: Lifecycle Investing). Taking future income into account, my Tesla position is a smaller share of the total. Additionally, I want to target something like 2x leverage (Lifecycle Investing, again), so 40% of my net worth is only 20% of what I’d want to allocate to the market.
That said, 40% might still be too much. I haven’t rebalanced after the recent run-up, and I have a pending to-do to calculate my estimate of the expected returns and variance, and then adjust accordingly. I’m not sure which way that will come out.