As I surf the internet, I keep running into articles or tweets or Facebook posts, about Elon Musk’s shrinking wealth due to the market price of Tesla Corporation’s stock going down (ticker: TSLA). Indeed, even on Daily Kos, there is a rec’d diary essentially gloating in the idea that he isn’t the richest person in the world anymore. And today it’s worse for him than it was yesterday, because as I type, the S&P500 is up .75%, the NASDAQ up 1%, but TSLA is down 5.25% for the day. It’s easy to have a bit of schadenfreude about this. I mean, the guy has shown us who he is, and to put it mildly, he’s a prick. Why not take pleasure in his rapidly diminishing wealth?
But here is the thing: It won’t make a bit of difference, to him.
The whole situation reminds me of a joke I heard (decades ago) when it was reported that Paul McCartney was the richest entertainer in the world. He had a reported net worth of about $750M at the time. The joke was that his wife had lost her purse one day, and Paul asked, “What was in it.” Linda said, “Oh, about $20 million dollars.” Paul replied, “No worries sweetie, we’ll get you another purse.”
And that’s sort of what it is like for Elon. If you do a search on his net worth, you get somewhere between $165B and $190B. I don’t really know what it is and I don’t think I really care. Because the number is so mind numbingly big, I can’t comprehend it. And according to brain science, neither can you.
If you had to spend $1,000 a day, how long would it take you to spend $1,000,000? It would take 2.74 years (1,000 days exactly). If you had $1,000,000,000 and had to spend $1,000 a day, it would take you 2,740 YEARS. That’s how big a billion is compared to a million (it’s exactly 1,000 times bigger). And if you think about it, both numbers (2.74 years vs 2,740 years) had the same emotional or bodily reaction inside of you. Maybe you respond with “wow” or “oh my!” but your reaction isn’t 1,000 times stronger, which is what the math tells you is the difference.
In brain science there's a law of large numbers, and it's this: the larger the number, the worse the human brain's ability to comprehend it. A general rule of thumb is that the brain counts like this: one, two, three, four, many.
A few years ago, I came across a website that put Jeff Bezo’s wealth in perspective, using the size of a computer screen pixel. At the time, his wealth was about $185B. For purposes of this explanation, a pixel is smaller than the size of the period at the end of this sentence. If one pixel represented $1,000, this is what it looks like so you can “see” it:
Clik here to view.
Do you see the green square, which represents 1,000 pixels or $1,000,000? For that to be $1 billion, it would have to be 1,000 times as long. And Elon has about 180 more of those much longer squares. Seriously, go to the website to see how long it takes to scroll through that much money, and to discover how just small fractions of it could fund things like school districts, health care, or higher education. (click here: mkorostoff.github.io/...). It’s worth your time if you haven’t seen it before.
The bottom line here is that, even if Twitter ceases to exist, and Musk loses all $44B he has at stake*, it won’t make a difference at all to him personally. Which, in my opinion, makes him one of the most vile men in the world. Because he is literally using his money to make the world a worse place. A world full of hatred and calling people who pray differently than you, or look different from you, or come from a different place than you, “others.”
Given how there is no public shares of Twitter, the proxy to punish Musk is to punish Tesla. I’m no lover of Tesla (I own a different brand of electric vehicle), but that is a company that has its own employees, factories, equipment, business plan, etc. It isn’t Twitter. It can certainly be argued that TSLA stock price is or isn’t worth what it is selling for today. That’s not what this diary is about. But if you want to talk about portfolio risk, this is a perfect example of “non-systemic” risk.
Bear with me for an aside. A stock is considered a “risky asset.” It’s risky because it can go up or down. If it goes down too much, you can lose your investment. For every stock that exists, 50% of that risk is called “systemic” and the other 50% is called “non-systemic.” Systemic risk affects all stocks simultaneously, like if a law or taxes change. Non-systemic risk is unique to a company. Patents, location, and personnel, etc, make up the non-systemic risk. And TSLA shares a CEO with a non-publicly traded company. So it certainly looks like it is suffering the risk of a the bad publicity generated from Musk’s civil intransigence. By the way, you can’t diversify away systemic risk, but you can diversify from non-systemic risk by simply adding another stock to your investment portfolio. Different location, patents, CEO, etc. That’s how (and why) diversification works.
At any rate, the point is that Musk is beyond redemption but will remain one of the richest person in the world until he dies. That’s just the way it is.
*It is widely reported that Musk didn’t fund all of Twitter himself, so he doesn’t face all the potential loss himself.