Investing

Elon Musk's Portfolio Defies the 'Rules' of Building Wealth

Austin Smith

Published: October 7, 2024 10:30 am

Last Updated: October 27, 2024 10:33 pm

Key Points:

• Concentration of Wealth: Elon Musk’s fortune is primarily tied to Tesla, making him less liquid despite his massive net worth.
• Comparison to Other Billionaires: Unlike diversified billionaires like Warren Buffett, Musk’s wealth is concentrated in one company.
• Other Holdings: In addition to Tesla, Musk’s significant investments include Twitter and SpaceX.
• As good as Buffett is, so far he’s overlooked “the Next Nvidia.” See what all the excitement is about by clicking here now.

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Edited Video Transcript:

[00:00:00] Douglas A. McIntyre: So depending on the day of the week, uh, Elon Musk is worth 200 billion, 225 billion. The number bounces around based on things like the Tesla stock. Of that amount of money, it’s really a very modest fraction that’s in, uh, is in Tesla. So that if you, if you look at his holdings, the part of it that’s liquid that he can trade, You know, turn into cash is Tesla stock.

[00:00:30] Douglas A. McIntyre: And if he’s a net seller of Tesla stock in any meaningful way. Tesla stock goes down. So we have one of the we have the richest person in the world and he’s illiquid

[00:00:44] Lee Jackson: Yeah, it’s interesting and he is one of the 10 richest men ever and he has more money than He has more money than Bill Gates. He has more money than Warren Buffett.

[00:00:56] Lee Jackson: And it’s an amazing story for a, for a guy, you know, that’s only in his early fifties that built, he was one of the early Tesla employees in 2008, all the money he had that went into, there came out of PayPal, which he was one of the original creators of, and, you know, he. He just he was one of the very first people to champion the electric car, and that was, you know, 16, 17 years ago, and, you know, built his way up to the top.

[00:01:24] Lee Jackson: But he again for a guy that’s worth it’s I think it’s closer to 250 billion. It’s all in Tesla. You know, he has his other big holding is when he bought Twitter, but he took Twitter private. So it’s literally private shares. which I’m sure he could sell, you know, over the counter to Goldman Sachs or somebody like that.

[00:01:44] Lee Jackson: Yeah, not much because he’s probably down on it, but all of his wealth, all of his wealth ostensibly is in Tesla, all of it. And that’s incredible. When you consider the sheer concentration of that for such a rich guy.

[00:02:03] Douglas A. McIntyre: Yeah. It, to me, it’s interesting though. Most super, super rich people, super rich people, um, gambled or started one thing.

[00:02:16] Douglas A. McIntyre: Yep. You know, you take guys, Gates, Bezos,

[00:02:20] Lee Jackson: the only

[00:02:20] Douglas A. McIntyre: person who’s actually built a super broad portfolio is Buffett. Buffett is the only guy where you could say, okay. He’s one of the richest people in the world, but his risk and portfolio is spread very, very widely. Incredibly, the rest of the people are, are founders and they’re still mostly in one thing.

[00:02:41] Douglas A. McIntyre: I mean,

[00:02:43] Lee Jackson: yeah. Interesting case goes for most quote, portfolio managers per se. He’s reasonably concentrated. But he has, you know, 45 or so, you know, public stocks in Berkshire Hathaway, but a huge private portfolio, which, you know, like you said, keeps him super diversified with, you know, uh, Acme Brick and Justin Boots and Dairy Queen and, you know, all the other things that he owns.

[00:03:17] Lee Jackson: Private insurance companies and railroads and, you know, electricity and Berkshire Hathaway, uh, real estate. So yeah, um, to be, to have all your eggs in one basket. But again, like you said, I mean, that’s been the case for some of the, you know, biggest players in the world in, in, in the history of the world.

[00:03:36] Lee Jackson: And that was the case, you know, with John D Rockefeller, you know, who, Owned Standard Oil when he was 25 or, you know, the guy that was the highest, had the highest net worth of Andrew Carnegie and sold U. S. Steel to J. P. Morgan. I mean, these were titans, but they were pretty concentrated as well.

[00:03:55] Douglas A. McIntyre: They were concentrated.

[00:03:57] Douglas A. McIntyre: Well, um, I guess the lesson here is, is that it’s really great to be rich, but it often means that you’re not liquid.

[00:04:06] Lee Jackson: Yeah, it is. Oh, well, yeah. And, and again, uh, there’s not a bank in the world that’s not going to, you know, let him collar some up and, you know, and, and take the money out of a collar or, uh, you know, anything he wants, he can get, cause he’s Elon Musk.

[00:04:23] Lee Jackson: And like you had mentioned earlier, You know, when we were talking about it is, you know, he owns all the SpaceX and that’s a huge business, especially with not just this, the rocket business, but the satellite business and everything that he’s, I mean, he’s, he’s the American Edison of this generation. He’s one of the most fascinating guys ever.