Elon Musk: Big and Small Revolutions

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Years ago I knew Mr. Musk would be big–would be a billionaire. The guy was planning on disrupting several industries. He and partners already disrupted the payment industry with PayPal. Now he’s starting to deliver.

MUSKS’ MANY CONTROVERSIES

Now, I’m aware that the billionaire has received a lot of money from the government (billions?), his businesses haven’t made much, if any, money and that some people just don’t like him, his companies or his politics. I understand.

But…

WHAT THE GUY HAS ACHIEVED

…is so significant that it’s now hard to ignore. Here’s a list of some of Musk’s work that is sure to get longer:

  • Co-founded Zip2 at about 24 years old, sells for $341 million
  • Co-founded X.com, turned into PayPal, sold for $1.5 billion
  • Founded SpaceX private space company
  • Space X successfully, privately and profitably supplies International Space Station
  • Invests in and now runs & controls Tesla Motors (TSLA, $195.64)
  • Tesla grows from $204 million in revenue (2011) to $4.046 billion in 2015
  • Tesla sales estimates are $8.56 billion (2016) and $11.71 billion for 2017
  • Essentially co-founds SolarCity (SCTY, $22.24) by supplying the concept and money
  • Went from non-billionaire to $2 billion net  worth (2012) and currently $11.5 billion net worth

Those are some pretty big successes. I know I can learn a lot from him. I hope he writes a book soon.

SO, WHAT’S THE GUY DOING NOW?

Musk and his companies are busy revolutionizing the way we drive, store solar power, interact with power company monopolies, delivering record-busting sales growth, delivering billions of dollars in cars, privatizing space travel and supply, changing commuting patterns and probably a dozen more things I forgot to mention.

So, yeah, are his stocks risky? Sure. I wouldn’t recommend them. Is he controversial? At times, definitely. Has he taken a lot of money from the government? Yep. Have other wealthy billionaires taken money and breaks? More times than we’ll ever know. But I sure wouldn’t bet against this new titan and his concepts.

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Romantic Brazil…

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HOME TO THE OLYMPICS, RAMPANT CORRUPTION, A RECESSION & MAYBE THE BEST OPPORTUNITY THIS YEAR

The Olympic Games are close. Brazil and the rest of the world are getting excited. The country has poured billions of dollars into getting ready. It’s sure to be a beautiful event. And, seemingly from Mount Olympus, a lightning bolt has struck Brazilian politics and economics.

They’re experiencing a 5-quarter recession…so far. The government is so crooked that 6 of 10 Congress members are facing corruption charges. The stock market is in the dumps.

SEEING THROUGH THE SMOKE

My favorite investing quote and strategy is to “buy when there’s blood in the street.” Very graphic but very helpful. We want opportunities that are cheap and beat-up. We want discounted assets.

The way I look at Brazil is the country is trading at 2005 prices. At that time, their economy was at about $882 billion. The 2016 estimate is for them to hit $1.53 trillion. That’s an increase of 73 percent! We’re buying a much bigger economy at half the price….

PLAYING THIS OLYMPIC-SIZED TRAGEDY

The largest ETF for Brazilian stocks is the iShares MSCI Brazil Fund ($28.15; symbol: EWZ). It has a 12-month yield of 3.3 percent and a low expense of 0.62 percent per year. The fund has over 60 different investments and over $3 billion in assets.

A warning: the top two stocks make up over 20 percent of the portfolio. So it’s both a concentrated and diverse fund. Yep. Sounds strange but they’ve achieved it. This can be good if you want exposure to Brazil and you have faith in these two companies.

The largest is Itau Unibanco. According to Wikipedia, it’s “the largest financial conglomerate in the Southern Hemisphere.” That’s usually a great way to get exposure to an economy. Banks lend the growth money, profit from upswings and are a good representation of the overall market. Buying a bank is like buying the lifeblood of a nation.

The second-largest holding is Ambev SA. They’re based in Sao Paulo and controlled by Anheuser-Busch InBev. This parent company is the maker of Budweiser, Corona, Stella Artois and over 200 brands. It’s also the world’s largest brewer.

These two concentrated positions look pretty stable and may juice-up the portfolio volatility. Both upward and downward. Yet the downward movement may have largely already happened.

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