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‘Don’t panic when the market does’: Elon Musk reveals his top stock purchasing advice and rails against passive investment funds that fail to get involved in running the firms they own shares in
- Elon Musk offered up investment tips to his 89M Twitter followers on Sunday
- He advised to buy stock in companies who sell products ‘you believe in’
- The billionaire also said not to sell your stake unless company is ‘trending worse’
- He faced backlash from users citing how he sold $8.5B of Tesla shares last week
- The tech tycoon also slammed passive investing, alleging it has ‘gone too far’
- Musk initially declared he was a passive investor in Twitter before amending a regulatory filing to indicate he sought an active role in the company
Billionaire Elon Musk offered up some investing tips to his more than 89 million Twitter followers, arguing against passive investments and urging people to purchase stake in companies that create products or services you ‘believe in’.
The Tesla CEO took to the social media platform early Sunday, which he is in the process of buying for $44billion, alleging passive investing has ‘gone too far’.
‘Right before he died, Jack Bogle (of Vanguard fame) said index/passive funds were too great a percentage of the market and he really knew what he was talking about!’ Musk wrote Sunday, neglecting to note that Vanguard is Twitter’s largest shareholder. ‘There should be a shift back towards active investment. Passive has gone too far.’
He also told his followers to ‘buy stock in several companies that make products and services that you believe in.’
‘Only sell if you think their products and services are trending worse. Don’t panic when the market does. This will serve you well in the long-term,’ he added, prompting users to point out how he sold off a total of $8.5billion in Tesla shares in recent days. The sales came as he agreed a deal to purchase Twitter.
The SpaceX founder’s criticisms of passive investing, which refers to shareholders who are not involved in the day-to-day decision making of a company’s operations, comes as Musk is being investigated by the Federal Trade Commission (FTC) over whether he violated disclosure rules while amassing a nine percent stake in Twitter before buying the firm in its entirety.
Musk, who began purchasing Twitter stock on January 31, initially revealed his stake in the platform on April 4 in a Securities and Exchange Commission (SEC) filing that disclosed him as a passive investor.
He filed an amended disclosure the next day reflecting his intentions to be an active investor after he publicly discussed potential changes for Twitter.
Elon Musk (pictured in February 2022) offered up some investing tips to his more than 89 million Twitter followers, arguing against passive investments and urging people to purchase stake in companies that create products or services you ‘believe in’
Musk alleged that more investors need to take an active approach, meaning they would be involved in the day-to-day decision making of a company’s operations
He also encouraged his followers to invest in products they ‘believe in’ and only sell when you believe the company is ‘trending worse,’ prompting users to point out how he sold off a total of $8.5billion in Tesla shares in recent days
Social media users questioned Musk’s advice to ‘only sell if you think their products and services are trending worse’ after he sold his Tesla shares last week.
‘Bro you just sold $TSLA stock last week,’ slammed Twitter user @stocktalkweekly. ‘You know very well that there are other reasons to sell stock besides products and services trending worse.’
‘It did make you the richest man in the world…. Buuut not sure you are following your own advice with your recent buys/sells,’ tweeted @SpacBobby. ‘Guess we shall see if you can ultimately fix $TWTR.’
‘Does that mean you think Tesla products are getting worse since you sold?’ @Redmercy questioned.
‘Interesting time to tweet this,’ wrote @crispylines.
Musk sold off a total of $8.5billion in Tesla shares in recent days, regulatory filings on Friday showed, which was presumably in order to fund his $21billion cash commitment in a deal to buy Twitter for $44billion.
Though Musk is the richest man in the world, with an estimated net worth of $246billion, most of his fortune is tied up in stock, and it had seemed clear he would have to sell off some assets to fund the Twitter takeover.
Social media users questioned Musk’s advice to ‘only sell if you think their products and services are trending worse’ after he sold his Tesla shares last week
About half of Musk’s selloff of Tesla shares was made on Tuesday. Musk sold another $4.4billion in the stock on Thursday, the new filings show.
On Thursday night, after the first round of share sales became public, Musk tweeted: ‘No further TSLA sales planned after today’.
Tesla stock, which dropped 12 percent as he made his initial stock dump earlier this week, popped 6 percent in morning trading on Friday following Musk’s vow not to sell the remainder of his stake.
To complete the Twitter takeover, which is due to close by October, Musk has committed $21billion in cash, $13 billion from Morgan Stanley in traditional bank loans and another $12.5billion from the bank and others in margin loans.
It’s unclear why Musk decided to liquidate part of his 17 percent stake in Tesla so far in advance of the deal’s expected closing date.
While Tesla stock has dropped recently, Twitter stock remains on the rise.
The social media giant’s closed at $49.02 on Friday, which is still well below the deal price of $54.20 per share that Musk and Twitter agreed upon in his bid to buy the platform.
Twitter’s stock value surged nearly 30 percent in early April after Musk disclosed his stake in the company.
However, it has not rebounded to the share price highs of last year when the stock was valued at $73.34 per share.
Tesla stock, which dropped 12 percent as he made his initial stock dump earlier this week, rose on Friday following Musk’s vow not to sell the remainder of his stake
Twitter closed at $49.02 on Friday. The social media giant’s stock value surged nearly 30 percent in early April after Musk disclosed his stake in the company
Musk has laid out some bold, if still vague, plans for transforming Twitter into a place of ‘maximum fun’ once he buys the social media platform for $44billion and takes it private.
His feistiest priority – but also the one with the vaguest roadmap – is to make the platform a ‘politically neutral’ digital town square for the world’s discourse that allows as much free speech as each country’s laws allow.
He’s acknowledged that his plans to reshape Twitter could anger the political left and mostly please the right.
He hasn’t specified exactly what he’ll do about former President Donald Trump’s permanently banned account or other right-wing leaders whose tweets have run afoul of the company’s restrictions against hate speech, violent threats or harmful misinformation.
Twitter and Facebook permanently suspended Trump’s accounts early last year following the January 6 attack on the U.S. Capitol.
In response to his suspension, Trump launched his own platform, Truth Social, which seemingly mirrors the Twitter interface. The former president said last week he has no intention of rejoining Twitter even if his account is reinstated.
Musk hasn’t ruled out suspending some accounts, but says such bans should be temporary.
The billionaire’s longstanding interest in AI is reflected in one of the most specific proposals he outlined in his merger announcement – the promise of ‘making the algorithms open source to increase trust,’ referring to the systems that rank content to decide what appears on a user’s feed.
Musk (pictured in March 2022) has laid out some bold, if still vague, plans for transforming Twitter into a place of ‘maximum fun’ once he buys the social media platform for $44billion and takes it private
Musk has called for posting the underlying computer code powering Twitter’s news feed for public inspection on the coder hangout GitHub.
However, some computer scientists allege such ‘code-level transparency’ gives users little insight into how Twitter is working for them without the data the algorithms are processing.
Analysts allege there are good intentions in Musk’s broader goal to help people find out why their tweets get promoted or demoted and whether human moderators or automated systems are making those choices, but note it’s no easy task.
Too much transparency about how individual tweets are ranked, for instance, can make it easier for ‘disingenuous people’ to game the system and manipulate an algorithm to get maximum exposure for their cause, Nick Diakopoulos, a Northwestern University computer scientist said.
Musk also wants to ‘defeat spam bots’ – accounts that mimic real people – and repeatedly said he wants Twitter to ‘authenticate all humans’.
The tech tycoon may also be considering offering more people a ‘blue check’ – the verification checkmark sported on notable Twitter accounts to show they’re who they say they are. Musk has suggested users could buy the checkmarks as part of a premium service.
He has also floated the idea of an ad-free Twitter, though it wasn’t one of the priorities outlined in the official merger announcement.
Advertisements accounted for more than 92 percent of Twitter’s revenue in the January-March fiscal quarter. The company did last year launch a premium subscription service – known as Twitter Blue – but doesn’t appear to have made much headway in getting people to pay for it.
Musk has made clear he favors a stronger subscription-based model for Twitter that gives more people an ad-free option. That would also fit into his push to relax Twitter’s content restrictions – which brands largely favor because they don’t want their ads surrounded by offensive and hate-filled tweets.
Musk has tweeted and voiced so many proposals for Twitter that it can be hard to know which ones he takes seriously.
He’s joined the popular call for an ‘edit button’ – which Twitter says it’s already working on – that would enable people to fix a tweet shortly after posting it.
A less serious proposal from Musk suggested converting Twitter’s downtown San Francisco headquarters to a homeless shelter ‘since no one shows up anyway’ – a comment taken more as a dig on Twitter’s pandemic-era workforce than an altruistic vision for the building.
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