Investing in One Company

We all know that investments can rise and fall in value. That a prudent investor spreads their risk across different sectors and across different markets. And we all remember our very first financial advisers, our Grandparents. Who would have told us not to put all our eggs in one basket.

So, can investing in one company, make you a millionaire?

Investing in Tesla

Between Christmas 2019 and New Year 2020, there was a story on the BBC about the soaring share price of electric car maker Tesla. Tesla has created, what it described as, an ‘army of millionaires’. This is also known as the so-called ‘Teslanaires.’

Shares in Elon Musk’s company soared more than 700% in 2020. Therefore, making Tesla the world’s most valuable car company. Elon Musk is the world’s richest man and has overtakenJeff Bezos of Amazon. Consequently, he is making many investors in the company millionaires.

However, as the article rightly points out, it has been a bumpy road for Tesla. In May 2018, Elon Musk wiped $14bn (£10.2bn) off the company’s value . He did this when he carelessly tweeted that, in his opinion, the Tesla share price was too high.

We all need to remember that for every Tesla there is a Sirius. Sirius Minerals was a mining company. They granted the right to mine potash in the North Yorkshire Moors near Whitby. Many local investors, swayed by stories of the potential returns, invested heavily. Therefore, putting their life savings and pension lump sums into the company. However, the shares steadily dropped. As a result, the company was eventually taken over with the shares trading at 5.5p. In addition, the local investors were left facing heavy losses.

Investing in Other Companies

Shares like Apple, Nike and Starbucks may have produced spectacular returns for investors on their way to becoming household names. However, many, many companies have gone in the opposite direction.

In April 2019, we saw Debenhams go into administration. We ask, what could have been safer than the British high street? Surely people will always need to shop? They will always need new clothes?

However, that was before the pandemic. 2020 was the worst year for high street job losses and store closures in 25 years.

There will always be winners and losers in investing. The good news stories, the ‘Teslanaires,’ will always receive plenty of publicity. After all, ‘Investor takes sensible long term decision with their financial adviser’ is hardly a headline story.

For our clients, having a Financial Adviser is the best course of action.

This is because there will always be a carefully constructed portfolio, in line with your financial planning goals and consistently monitored by your financial adviser.

It may not make the headlines, but it will certainly let you sleep at night.