Wednesday Briefs – 3 March 2021

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THIS WEEK: One Year of Wednesday Briefs; Work from Home; Peak Elon; Conservatism.

One Year of Wednesday Briefs

It has been one year since the first Wednesday Briefs appeared on this site just as the pandemic was accelerating. Thank you to our readers from all over the world. If you are learning or otherwise benefiting from the Wednesday Briefs, please recommend them to your colleagues and friends. Word of mouth makes a big difference. The Briefs will continue to evolve and improve over the next year and beyond. Stay tuned.

Work From Home

No one will say that it has been easy. But compared to the last big pandemic in 1918-19, the present one has been far less severe, except for people who lost a loved one. Consider that a large number of the victims back then were soldiers returning from Europe, that medicine was rudimentary compared to what we have today, that telecommunication was nascent to nonexistent, that homes were not as spacious, comfortable or sanitary.

One of our current blessings has been the ability to shop, socialize and work from home thanks to high-speed broadband. Except for medical and essential workers, everyone was able to shop from home, be entertained at home and work at home. Depending on the person and the task, working from home was more productive or less productive. Because this is obvious, it is also obvious that employers and employees are taking notes on the best way to move forward. Some people prefer or need a flexible work from home (WFH) schedule. Others thrive on the energy and structure of an office environment. Some firms need everyone on site. Others want to save money by reducing office space.

Now that the virus is subsiding, the question then is what happens to WFH. It will not be a one size fits all answer, but several answers. For each individual career, a problem will arise when someone prefers WFH but his firm wants him in the office, or vice-versa. For those who opt for WFH, be careful what you wish for. We could soon have two-tier or two-speed employment, the office worker on the faster track to promotions and raises, and the homebound worker on the slower track. Both may be fine if that is what a person wants, or not fine if they feel that the arrangement does not fit their life needs or ambition. Looking on the bright side, there are now options that fit different personalities and needs.

Peak Elon

Was it Elon’s grilling of the Robinhood CEO (“the people demand answers”)? the tweets during the GameStop madness? Tesla’s investment in Bitcoin? the invitation to Putin to appear jointly on Clubhouse? For a while, Elon Musk was everything and everywhere and on everyone’s mind. Ubiquity is often the sign of a top, as we know from the tale of the shoe shine boy who obsesses about stocks. Which begs the question: Did early 2021 just give us Peak Elon?

There is more to Musk than Tesla but Peak Elon could in theory coincide with Peak Tesla. That the stock is overvalued is beyond contention. Bearish estimates put the valuation at somewhere between $50 and $250, depending on how much you allow its cars to be a software product instead of an automotive product with a long-range battery.

Competition is coming fast with all the majors rolling out electric vehicles (EVs). It may be that none of them match Tesla’s cool factor, or that Tesla’s battery can travel farther on a single charge, but these considerations alone will not prevent the likes of Volkswagen and Ford from making significant inroads in Tesla’s market share in EVs. Competition is coming fast in software too, with Google, Apple and others all developing automated driving software. Meanwhile the profit picture is unclear. Carbon credits helped the company turn a profit in 2020 (and join the S&P 500) but they are expected to fade in 2021.

Much depends on the macro environment. With free money gushing out of Congress and the Fed, Tesla stock could make new highs throughout the rest of the year if long term rates do not rise too quickly. And it is then evident that Elon would also break new all-time highs.

Conservatism

Not everyone agrees on the definition of a conservative. The old school may not be entirely on board with thrice divorced talk show hosts (Limbaugh) or former casino operators (Trump) calling themselves conservatives. For the younger crowd puzzling over the word, there is Merriam-Webster and it has these definitions of conservatism: 1) disposition in politics to preserve what is established, 2) a political philosophy based on tradition and social stability, stressing established institutions, and preferring gradual development to abrupt change, and 3) the tendency to prefer an existing or traditional situation to change.

William F. Buckley Jr., a conservative circa 2000.

In short, it is a combination of resisting change and of upholding what is already there. Do today’s conservatives check all these boxes? They do in the resisting but they don’t as much in the upholding. They do, in opposition to the more militant trends on the left, but they don’t, in the definition of their own positions, in particular with regards to “tradition and social stability”, “established institutions” and a preference for an “existing traditional situation”. The talk of overhaul and the skepticism about established institutions are common within the Trump base. That base may be more Trump than genuinely “conservative”. But then, how many people are left who are under 50 and truly conservative?

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