The other day Wall Street declared that Tesla, as a company, is worth more than Ford.
Not a surprise: according to the Motley Fool and others, the most valuable companies in the world are Apple and Alphabet (Google), followed by Microsoft, Amazon and Facebook. [ https://www.fool.com/investing/2016/11/03/the-most-valuable-companies-in-the-world.aspx ]
Think about that for as minute. Apple has relatively few employees per dollar, they hire Asia to do most of their work. Amazon is just an oversized K Mart. Google and Facebook own mostly, well, data – electronic bytes with no discernible mass.
Meanwhile, classic American companies – Ford and General Motors, Coca-Cola and Pepsi, for example – with plants everywhere, a century of history and thousands of hard working employees – have less value than the electron banks.
Not everyone agrees with the new math. Forbes, to cite a prominent critic, thinks it high folly to say Tesla has more value than Ford.
Still, values determined by a small number of super investors and commercial equities traders (who profit from confirmation by other traders), swing billions of dollars about the market every day. That means the retirement accounts of middle American families, the pension funds workers depend upon for their Golden Years, and, the ability of companies to get credit to continue their work relies on artificial numbers created by an ultra small elite of market manipulators.
Wealth used to be measured in cash and land and other hard assets. Today most wealth is as firm as smoke: value created out of opinion.
Imagine how easy it would be for all of Facebook’s value to blow-away, if say, half their users abandoned them over their sales of personal data.
Remember when you could earn money on savings and investments with dividends on stocks and interest from bonds and savings?
The new normal, as noted in the New York Times [April 9, 2017, Near-Zero Interest Rates: Get Used To Them, Justin Wolfers, Univ. Of Michigan] , has the Federal Reserve system holding interest rates down to near the current “almost zero” rate: That’s troubling for many reasons. If the Fed can’t cut rates as much as required to fight a slowing economy, then recessions will become more common and more painful.
In other words, the working stiffs lose again and again.
The only way to make money? Trade and trade and trade, buy the smoke, sell the smoke, pay the commissions and pray for more smoke.
In that scenario – make that our new reality – the only way to amass resources for the future is to trust that ultra small elite to let you join in their fun. Accept the belief that a company selling less than 90,000 cars a year [http://www.greencarreports.com/news/1103846_tesla-projects-total-2016-sales-of-80000-to-90000-electric-cars ] has more value than the one which sold 236,000 last month [https://corporate.ford.com/content/dam/corporate/en/investors/investor-events/Sales%20Calls/2017/March-Sales-2017.pdf ], a slow month.
I know, that sounds scary. Most roofers aren’t conversant in high frequency trading and dollar averaging of their portfolios. And, they might feel more comfortable buying stock in Ford which makes cars instead of Facebook which makes…
Remember what I’ve been saying – this is a time of extreme change, a new reality where workers and people aren’t valued. Not even as much as smoke.
Resist.
Submitted by Glenn Koenen, WCD Member