Doing an Elon Musk

Those of my generation, which is the same as Elon Musk's, don't like risk so much, we are rather conservative when it comes to investing money; although the South African entrepreneur who became a naturalised American and Canadian citizen doesn't exactly fit into that mould. 

Many of his business projects are innovative, risky, avant-garde, visionary and a bit crazy, I must confess that they do not seduce me... however, the tycoon has an overwhelming success among millennials and above all a peculiar pull among the youngest of the so-called Generation Z. He is considered a hero, a role model, a role model of the future.

They consider him a hero, a role model to follow and imitate, at least my son Julian, 19, is attracted by the diverse companies he has co-founded and I mention just a few: Tesla, PayPal, Hyperloop, SolarCity, even the obsession with SpaceX to conquer planets and even colonise them. 

There have been many times when the media have broadcast news of failures in tests or presentations of Tesla vehicles; I am remembering the embarrassment of the high-capacity armoured car, the so-called Tesla CyberTruck, which ended up with broken glass in the middle of a presentation to the public and various investors called to corroborate the high range of its armour. 

That happened in November 2019, but, still last year, one of the company's vehicles, a Model 3, hit a fake pedestrian in an automatic braking test. 

Tesla Inc. for such a young company (founded in 2003 in Palo Alto, California) already has several models of its brand new electric vehicles discontinued, at least a fact to draw attention to; especially for a buyer who purchases a car at the risk of soon being out of the catalogue.

Nor have the constant explosions of his rockets to Mars or the moon, which delay Musk's dream of space tourism, gone unnoticed. 

Every time one of his electric vehicles fails or one of his rockets explodes, Musk burns money... billions of dollars, and with investors who aren't always obliging, who likes to lose money?

Musk knows the power of social media and that he is followed, admired and imitated, his fans adore him, no wonder he sometimes takes to his Twitter account to share nonsense that only serves to unsettle shareholders; for one tweet, one day, the company lost 10% on the stock market. 

His most recent extravagance has to do with bitcoin, the cryptocurrency still has no globally recognised legal status, operates without prudential regulation and with a risk intrinsic to its own volatility: the person who invests in bitcoins assumes full risk. 

That is why Musk's announcement - to the four winds - that he will invest 1.5 billion dollars in bitcoins is so strange; as expected, the market overreacted and bitcoins have jumped to a value of 46,000 dollars and could go as high as 50,000 dollars. 

The danger is that millions of unwary, ambitious, gullible and desperate small investors will follow, because, in the midst of the pandemic, they believe that they will have a golden opportunity to make a lot of money in the short term, as if from heaven they were giving bitcoins away.

Pyramid businesses always go wrong: as happened with Bernard Madoff's investment fund, which ended in a huge fraud and bankruptcy; and cryptocurrencies follow the same scheme.

Moreover, there is no deposit insurance with cryptocurrencies, so who do investors claim their money back from? And is there a known physical branch to make a claim or do you know the names of the people behind the virtual currencies?

I fear that others will want to do a Musk and trust with their eyes closed and go along with it, only to be fleeced; the European Central Bank itself has repeatedly warned of the danger of a bubble.