Why Performance ultimately wins – IMHO

The Amazing Effects of Polarization and Politicization

This week I came across several studies and articles that indicated something I have not seen before and was surprised, even somewhat shocked about.

People supposedly make large-cost purchases based on political beliefs. Seriously?

As you know I am always preaching to use your money and invest it in high-performance assets. We want to invest in properties that have a great price/income ratio. We want them to have positive cash flow from day one.

We also make our investments for the long term.

For our properties in the residential real estate market that also means we want the market to be stable in the long run. Yes, some markets can go up like crazy in a few years and if we enter early and pick the exact perfect moment to sell, we can make a good profit, but we might have to pay negative cash flow each month.

That market and asset-picking approach is much more akin to gambling in the stock market casino.

What the articles and studies seemed to indicate is this:

People pick the purchase not based on performance or features but on the associated political message.

Basically, I can buy a house in a location where my ownership indicates I am either a Democrat or a Republican.

I can’t see myself ever doing something like that but let me give you the data the researchers and commentators found, so you can join me in my amazement:

On Feb 1st, 2024, using the image above the Economist wrote:

Packing ever?more ions into ever smaller batteries, spangling the landscape with charging stations, lowering the cost to make electric cars and trucks: these are complex, exciting challenges that engineers, regulators, and others will probably solve. The tougher problem, the one that may define the limit of the American market for electric vehicles, is much stupider. It is polarization, the stuff that makes an?EV?go but in its metaphorical incarnation is cursing not only America’s politics but, increasingly, its culture and marketplace.

The research cited here comes from a relatively new company called EVpolitics.org

Mike Murphy, one of the founders, illustrated how crazy America has become in an article he tilted:

Meet Elon Musk 2.0

Mr. Murphy writes:

Our polling shows a fascinating polarization surrounding Elon Musk. Put simply, Democrats and people who say climate change is a serious problem that must be addressed do not like Elon Musk. That’s quite a change from where Elon started as the visionary who put modern mass adoption of EVs into motion. Conversely, highly EV-skeptical Republicans… quite like Elon. As the mercurial tycoon has evolved rightward on many issues, Elon v2.0 has found a new audience of admirers and fans.

Try this one on for size… Trump supporters like Elon quite a bit, while Biden supporters, well, pretty much despise him. “But wait a minute, Biden likes EVs and Elon is Mr. EV, so shouldn’t…”

Don’t even try to figure it out. In our tribal politics, the enemy of my enemy is, naturally, my friend.

Metaphysics aside, this funhouse mirror situation has high stakes out in the real world of moving the U.S. toward EV adoption.

As our research has shown, political ideology has deeply tangled up the EV marketplace in the U.S. Many consumers, especially on the right, see EVs far more as political statements than as vehicles.

So, it is no surprise that the data we found regarding opinions surrounding Elon Musk reflects that.

What do I think about this?

First, and most of you know this about me, I am a Tesla fanboy, and it’s one of two stocks I have invested in. The other one is Palantir.

I also unhappily tell you that I currently don’t own a Tesla car.

When I checked the statistics for this article regarding the loyalty of Tesla owners, it is the highest in the car industry at 73%+.

That is how people who actually own the product behave and what they say about their cars.

When these surveys were done nobody asked these owners for their pollical leanings. They speak about the performance and having a vehicle that is part of the transportation future, clean energy, less air pollution, and cheaper to operate than comparable vehicles.

Those claims, if translated to our investing philosophy, also apply when we evaluate the value assets we put our money in.

They need to perform well and be located in good locations.

They cater to the belief that more and more people can live where they want and work from where they live. That’s part one of the equation.

Part two is the fact that given the choice more and more people would rather live in a single-family house or a duplex than an apartment complex.

We invest in and then offer those people nice houses for a fair price, and everybody wins.

The tenants win because they get great living space and the opportunity to raise a family and we won because we can generate positive cash flow in an inflation-protected investment.

Are you ready for the last crazy suspicion in this context?

Some people actually claim that Elon Musk has made some statements since buying Twitter and opening many previously banned accounts to appease Republicans.

With the original appeal being for Democrats to invest their money into something they think solves or helps with Climate change, Musk got them to buy Tesla vehicles.

With the statements appeasing Republicans, he can get them to buy Tesla cars because they like his statements and his free speech absolutism.

Is it possible to play political leanings and emotions this way?

I don’t really know.

I found these findings fascinating but I also have one strong belief:

At some point when people look at the amount of money they want to spend, they will test before they buy.

If anybody is ready to consider an EV, regardless of what got them to try, they will ultimately buy the vehicle with the best performance.

That’s why we buy the properties with the best performance. ?

The polarization is crazy these days and one can only hope that it goes back to something more reasonable when the elections of 2024 are over.

What do you think? Would you buy a car or a type of car based on the political statement one could perceive, either for the brand or the CEO of the brand?