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“Don’t stress over short-term stock market swings” is a maxim on which Donald Trump and I might agree, even if he is keen to take credit for upward rallies. The shakedown of the past few days is a natural reaction to the wild six-week ride of Trump’s tariff and foreign policy gambits and the realization that if he keeps it up, he’s far more likely to harm the economy than boost it.
But with a mad king surrounded by madder courtiers anything can happen, including ever more eccentric reversals. So watch the White House tragicomedy but don’t get hung up on the Dow Jones index.
But having said that, there’s one stock whose descent is more significant than others. Tesla, Elon Musk’s electric vehicle company, has lost more than half its value since December. Its underlying car business, a true pioneer in the previous decade, has been declining in the face of Chinese competition and for lack of new models; but Musk has kept the valuation sky-high largely through social media hype about driverless “robo-taxis” that have yet to come into production.
Now those who dislike Musk’s federal job-slashing at Trump’s right-hand talk of boycotting Tesla, while those who still think he’s a genius worry he’s too distracted by power. And analysts point out that at a market capitalization of $700 billion (on Monday, that is), Tesla was still worth more than the rest of the US auto industry combined and still trading on a forward price-to-earnings ratio that’s a multiple of any of its competitors — including BYD, the Chinese manufacturer which has surpassed it as the world’s biggest EV seller.
In short, Tesla’s share price is one of the biggest hot-air balloons in the history of stock markets — and Musk’s current prominence is based not on statesmanlike wisdom but very largely on America’s (and more specifically Trump’s) fascination with his multibillion fortune, which is a simple function of that share price. Of course he could not have got there without being a mercurially brilliant engineer and investor in his earlier career; but on the platform of global affairs he’s wrongheaded, misanthropic and extremely dangerous. If his name fades as Tesla falters, the world will be a safer place.
