Investors are herd animals

Investors are curious ducks.  They're herd animals, eagerly investing in a company because the cool kids say it's the Next Cool, Hip Thing.

The herd mentality can be particularly strong with new companies working in a startup technology, when hype and vaporware are more of a driver than balance sheets and reality.  This becomes THE main driver when the company's CEO and founder is good-looking and charismatic, like...Elon Musk.

Musk founded Tesla, which has only made a profit in the last two quarters.  And yet Tesla’s market capitalization is $81.4 billion, edging out Ford’s peak market value of $80.8 billion.  Tesla also had a larger market value than General Motors, which peaked at $66.86 billion in 2017.

In one respect that's very impressive.  But there's something curious here:  In 2019 Ford sold 2.4 million vehicles.  GM sold 2.87 million vehicles.  Tesla sold just under 370,000 vehicles.  Yet has the same market value as Ford, despite selling less than one-sixth as many vehicles.

Musk actually has a pretty lousy track record, but so far has managed to dazzle virtually every so-called journalist.  It'll be interesting to watch how this plays out.